Car Insurance in Pakistan: A Comprehensive Guide for 2021-22

Smartchoice Editorial
June 29, 2021

2020 and 2021 both the years seem like the upcoming years of precedented change. The world since the pandemic has already seen a lot of changes, the way we travel, our hygiene, how we move about, things we carry and even as basic as how we meet and greet has changed over the last two years.

But since there has been vaccines and countries slowly and gradually lifting the travel bans. There’s plenty to be excited and curious about in the world, not only in the overall scenario but also in cars in 2021. We’re set to see both an electric Mustang and Hummer, and also Determination, the rover that’s landing on Mars in February to look for signs of ancient life that existed there. And while Determination isn’t technically a car, it has four wheels and it looks pretty cool.

The world of car insurance, admittedly, is not virtually as flashy as finding life on Mars or the hummer can be. No insurance agents nor providers are setting up shop on Mars (anytime soon). But that doesn’t mean in any case that you should look at your car insurance policy as some sort of ancient remnant.
We at Smartchoice have some pro-tips that can give you a fresh outlook that can help save you both time and money. And we believe that’s something to look forward to.

The Future May Already be in Your Hands

Here’s a simple way to get a jump on the 2021 train and prepare for 2022: start with internet surfing for your car insurance quotes and details. A good insurance provider website will have everything you need to know built-in into a user-friendly interface, such as your insurance proof, policy documents and the ability to file a car insurance claim.

While your roundup up the top car insurance websites takes a look at some of the major insurance companies and their digital policy offerings. One might be pleasantly surprised at some of the extra features the insurance company has, like petrol station finders, parking locators, local attractions assistance and roadside support.

Basic Tips for Car Insurance

File a Contactless Car Insurance Claim

If you need to file a claim for an issue covered by the car insurance policy, like a car accident or flood damage, an individual can file a car insurance claim digitally means online. You can typically do this through your insurer’s mobile app or website. It’s a good option that maintains social distancing and depending on the complexity of your claim, you may be able to go through the entire claims process from the comfort of your couch.
For example, you may be able to upload photos of the car’s damage on the website if the insurance providers agree, which your provider can use to write a repair estimate of the vehicle, and then either an individual can get it repaired from the authorized repair shops or the individual can get it repaired and can be compensated accordingly.

Driving Less? Look Into minimal coverage

If the pandemic or any other factor has drastically altered your driving behaviour long-term, you might want to look into alternative car insurance plans that would provide you with coverage as per the needs of an individual.

Here’s how it normally works: the policyholder gets charged a bare minimum amount for the bare minimum coverage. The annual premium will depend on how much coverage a person needs. For example, if a person drives just for essentials and no other commute is undertaken during the month, then an individual can go for third-party insurance that would fulfil their basic needs for protection. One thing that needs to be kept in mind is if you expect to return to your office for a long daily back and forth, you could end up paying more per month than with a traditional car insurance comprehensive policy.

Mind the Gap If You’re Taking out a Car Loan or Lease

If you plan to buy an expensive new car in 2021 or 2022, it’s a good idea to consider the gap while driving and considering insurance accordingly.
If your car gets totalled (destroyed) or stolen, the insurance provider will check the car’s actual value. This amount could be less than what you owe on the loan or lease if you bankrolled most of the car purchase, or if you bought a fast-depreciating luxury car. The difference between the insurance check and the loan/lease balance is the insured IDV coverage will compensate you.
For example, if you have a 20, 0000 remaining on a car loan but your vehicle is worth approximately a little lesser than the IDV the insurance would pay the total sum of the vehicle at the market value.

Here are some tips for first-time car insurance buyers

 

Think Twice Before Dropping Optional Coverage Types

If you have an older car, you might be thinking of getting away from third-party and comprehensive car insurance to save on your car insurance premium. Stop and take a deep breath and think twice. Leaving the coverage could leave an individual with significant coverage issues. For example, if you crash into a fence or a tree, it would heavily cost a person to pay their car repair bills on their own.
If you decide to drop coverage, you don’t have to drop your insurance plans. For example, if you have a clean driving history, when on roads you need to understand that everyone doesn’t drive alike you may be a cautious driver but another person might not be so it’s better to keep comprehensive insurance. The comprehensive plan pays for the car repairs for problems that don’t involve your own driving or outcomes of not anything done by you. For example, if you live in an area that gets severe weather extreme rains or harsh cold snaps, you might want to keep comprehensive insurance for hail damage and falling tree branches and other issues alike.

Collision insurance Comprehensive insurance
Car damage from hitting an object, like a car, building or pole ✓
Car thefts or parts of the car ✓
Non-crash damage such as fire, flood, hail, vandalism, falling objects (like a tree branch) and natural disasters (such as a tornado) ✓
Broken windshield ✓

Make Sure You’re properly Covered Before using it for a side hustle

If an individual is planning to use their car for a side hustle, the person needs to be clear with their insurance provider of the nature of the usage of the car. The insurance would fall under domesticated use or commercial use. For instance, if a person plans to use the car for making deliveries for restaurants, groceries or other items.
That’s because making deliveries is considered commercial use of the car, not personal use. If the individual gets into a car accident while doing the side hustle, the private car insurance policy could deny the claim, meaning the policyholder could be stuck paying out of pocket for car restoration bills and medical expenses (if any individual with injury is involved).
Talk to your car insurance provider before starting the side hustle using the vehicle to make sure you get the right coverage and avoid a possible and probable financial disaster.

Prepare Yourself for Your Teen/Young Driver Taking the Wheel

If you have a young individual who’s going to be driving age in 2021, let’s get the bad news out of the way. You are going to pay a whole lot more for car insurance. Adding an inexperienced teen driver can be an added liability to the car insurance cost annually to your car insurance premium, keeping in view the accidents the young one can be a reason too based on Forbes Advisor’s research.

But there are ways and means to reduce anxiety about the young one driving. By portraying as a good driver role model, safe driving habits can be instilled in the young ones. For example, an individual can re-familiarize themselves with the vehicle’s safety features and discourage phone use while driving.

Safe driving has an immediate payoff with safer roads and, eventually, it’ll feel better on your wallet. While it doesn’t happen overnight, keeping accidents and violations off a teen’s driving record will result in substantially cheaper rates.
Drivers looking to get insurance quotes can do so while sitting in their office drivers and car owners can also request quotes via phone or they can get them online. Most of the renowned insurance providers have websites that offer online quotes where the individual pursuing insurance will need to provide details such as name, address, location, vehicle type, how they use the vehicle, and how much they drive to understand the coverage required and finally to get access to quotes. Some insurance providers will even allow drivers to arrange a survey at the end of the quote process.

The insurance policies are sold by Smartchoice they work directly with an insurance company or by agents who work independently and can offer multiple quotes from different providers, without having to visit several agencies.
Smartchoice. pk is an online provider of life, health, travel and car insurance quotes and policy providers. This website is distinctive because it does not simply stick to one kind of insurance provider, but brings the customers the best deals from many different online insurance providers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, clients have access to quotes and policies for multiple insurance plans from numerous agencies, such as local or nationwide agencies, brand names insurance companies, etc.

Features of the Insurance Company an individual should go for?

These are some of the top insurance providers of Pakistan, these insurance policy providers have multiple coverage and plans as per the needs and requirements of the individual and their vehicle.
1. UIC Insurance
2. Askari General Insurance
3. Jubilee General Insurance
4. TPL Insurance
5. Adamjee Insurance
6. IGI Insurance

  • Choose an insurance company that requires minimum paperwork from you
    Apply for an insurance cover that requires minimum paperwork
    Many trustworthy names are operating in the field of auto insurance in Pakistan. Most of these auto insurance companies offer you a fast and convenient process to apply for car coverage. IGI Insurance, EFU General, Adamjee Insurance, Jubilee Insurance, and Askari Insurance Company Ltd. are some of the companies you can trust with your car coverage in Pakistan.

Take a look at the parameters given below before picking one of the insurance companies for your vehicle coverage.

Select the company that offers you:

1. Quick process of applying for an insurance cover with minimum paperwork.
2. 24/7 and reliable customer support
3. Lowest premium on a certain amount, condition and model of car
4. Swift process in settling the claim (in case of a car accident or vehicle theft)
If you need further information related to the process of applying for car insurance in Pakistan, email us at customersupport@smartchoice.pk

How Does Car Insurance Work In Pakistan?

Insurance companies usually charge 2-3% of the total car cost from people who buy car coverage in Pakistan. Moreover, there is a certain amount of depreciation that you have to pay when there is a need to change any of the vehicles’ parts. According to general practice, the rates of depreciation that insurance buyers have to pay on the replacement keeps getting higher with each passing year. For example, in the first year of your car insurance, you may have to pay 10% depreciation cost, however, the figure can go over 70% in the seventh year.

Types of Car insurance coverages available in Pakistan?

Features of Car Insurance:
Once you purchase car insurance, you get coverage on these incidents.
1. Car Repair Costs
2. Car parts replacement coverage
3. Damages to the vehicle due to own faults
4. Damages caused to the vehicle due to third party mistakes
5. Fire and theft causing damage to the vehicle
6. Riot and strike in the surroundings
7. Flood and hailstorms (Natural Disasters)

Types of car Insurance in Pakistan:
Different types of car insurance coverages available in Pakistan are.
1. Comprehensive Car insurance.
2. Third-party Liability Car insurance.
3. Crash Car insurance.

What Is Comprehensive Car Insurance?

Comprehensive Car Insurance is the most appropriate for any driver. The plan main goal is to cover the primary driver, car, and reparations to the third party involved in an accident. Comprehensive car insurance, as the name advocates, covers everything from fender to the bender. Comprehensive car insurance provides you coverage for all aspects of your vehicle, be it accidents, fire, theft, flood, riot, or third party liability coverage.
Benefits of comprehensive car insurance:
1. It allows you to right for accidents that happened because of your fault.
2. When someone steals your car, it pays to replace it.
3. If your car faces damage and even you fail to prove whose fault was it, Comprehensive insurance will cover the damage.
4. It provides ease.

What is Third-party liability car insurance?

Third-party car insurance covers damage to others as a result of an accident that’s a policyholder’s fault. The policy holds no responsibility for damage to the insured car. The policy does not cover theft of your vehicle. The third-party insurance will pay for the impaired vehicle, property, and passenger/driver of the Third-party vehicle. It is the most basic or simplest level of cover, protecting the policyholder against damage caused by the policyholder or by one of the passengers to others.
Essential points to keep in mind when getting third-party insurance: The disadvantage is that the third party policy would not be of any assistance in the event of theft of your vehicle or damage due to fire.

What is Accidental car insurance?

Accidental car insurance covers the damage to the policyholder vehicle from another car, accident with an object such as a fence, and single-car rollover accidents. One should keep one thing in mind that weather conditions or natural disasters are not part of Pakistan’s accidental car insurance coverage.
Aspects not covered in Collision car insurance:
The accidental Collision typically won’t cover:
1. Injuries to other drivers in the event of an accident
2. Vandalism or theft
3. Accidents with animals
Losses are other than car damage from an accident.

Coverages such as accident, comprehensive, property liability, and bodily injury liability can help cover the costs of expensive claims if an accident happens. Protect Yourself and Others. The right car insurance policy can help protect you, your family members, your passengers, and other drivers.
Do’s and don’ts of Car Insurance?
These are some of the does and don’ts of car insurance
We all know that any kind of travelling is a reality and filled with vulnerability. An accident that happens can destroy lives and families. Insurance helps with timely financial aid in case of such a catastrophe. Some forms of car insurance are obligatory under Pakistani law so you should keep informed about car insurance.

Here are some Dos and Don’ts for buying car insurance

Dos

When you buy a car insurance policy you should:
Know that you can buy this policy through anyone and there is no compulsion to buy it through your vehicle dealer
1. Fill the proposal form yourself even if the vehicle dealer is arranging for the insurance
2. Fill the proposal form carefully and precisely and thoroughly
3. Keep a copy of the completed proposal for your records and proceedings
4. Read the policy brochure/ prospectus and go through the website carefully to know what is covered and what is not and what each provider has to offer
5. Ask for information about add-on coverage that may be available and choose what suits the policyholder needs
6. Provide documents to insurance provider such as Permit and Driving License to the insurance company for verification
Ensure that you keep these documents updated from the concerned authorities

Don’ts

1. Don’t let anyone else fill your car insurance details form
2. Don’t leave any column blank in the form
3. Don’t forget to renew the car insurance policy without any break each year
4. Don’t forget to ask for the correct procedure when buying a used car that already has insurance in place.
5. Never make false declarations about the actual use of the vehicle you are insuring, false declarations can have a negative
impact on the car insurance policy

Dos and Don’ts to be kept in mind while filing the car insurance claim with the insurance provider:
The basic reason for getting your car insured is to get financial cover in case of disasters. By honouring a genuine claim, an insurance provider fulfils the promise made to the policyholder at the time of policy purchase. Be it an accident or theft of your insured vehicle, the insurance provider understands that an individual is already distraught because of the loss suffered. However, the applicant needs to follow a preset set of steps to get the desired claim settled.

Dos and Don’ts While Filing a Car Insurance Claim

These are some of the do’s and don’ts to follow when filing an insurance claim. Going through each point beforehand will simplify things in a case and the situation an individual can be if they are in a situation to raise a car insurance claim. Below mentioned are the steps to successfully file the claim.

How to Claim Car Insurance?

To file an insurance claim, get in touch directly with your insurance provider. The first step is to get the car claim registered with the provider that insured your car. The next step is to file the paperwork required by the surveyor to reckon your claim as genuine.
In the meantime, your car will be sent to a garage within the insurance provider network in case of a cashless motor insurance claim usually provided with all car insurance plans. The extent and nature of the damage will be estimated at this stage. If the claim is settled by your provider, the policyholder doesn’t have to pay for getting the damages repaired. However, after getting the damages repaired the policyholder needs to pay the necessary and obligatory or voluntary deductibles.
In case of a compensation claim, the insurance provider will repay the money the insured spent on getting the car repaired, after subtracting the due deductibles.

Dos and Don’ts of Car Insurance Claims

Filing for an insurance claim can be slightly overwhelming as the policyholder has already suffered some or the other kind of loss. But, nowadays insurance providers have decided on a customer-centric approach because of which the policyholder now faces the least expanse of hassle. However, if an individual is already aware of the do’s and don’ts of filing a claim, the entire process will be smoother and the chances of the claim being honoured/paid out will become higher.

1. File a Police Complaint

Irrespective of the kind of claim you raise, intimating the police is important. The first information report will depict the scene of an accident in a proper format. This will help the insurance provider to gauge the state of affairs in a better way.

2. Get in Touch with the insurance provider

In the present situation, the applicants do not have to rely on the insurance company agent to do the formalities on their behalf. Filing a claim has become easier with improving and advancing technology. Get in touch with your insurer’s customer care service to understand the car insurance claim process followed by them.

3. Take Extra Care While Filling Forms

Keep all the information in hand while filling the claim form. This includes the policyholder credentials, car insurance policy details and information of the insured car. A simple typographical error or fault can send incorrect information to your insurance provider causing a delay in the processing of the claim.

Now here are the things you should avoid doing while claiming car insurance:

4. Don’t Make On-the-spot Settlements

In case of an accident, the third party may offer on-the-spot settlements. It could be far less than the actual cost of getting the damages repaired. It’s always a good idea to ask for the policy details of the third party to raise a claim.

5. Don’t Miss Timelines

Depending on the type of car insurance claim, the insurance provider will set the timeline for raising a claim. Get in touch with the insurance provider to know the precise number of days in which you must file your claim. The timelines are fixed to avoid substantial loss happening due to the continued use of an impaired vehicle. However, in case of a serious mishap where the owner of the policyholder car is injured severely and hospitalized, the insurance provider may consider withdrawing the timelines.

6. Don’t Be Dishonest About the Claim

An individual needs to understand that only a genuine claim is honoured by insurance companies. If a fraudulent claim is detected, the track record of the claimant is soiled. Always be honest about an incident that took place and files a genuine claim. To honour a claim, the insurance provider needs to understand the details of the incident. By filing a claim, you are conveying these details to your insurer. Following the claim process and being honest about the claim increases the chances of your claim being settled.

What should be the ideal Renewal time period? When should I apply for Car Insurance Policy?

It’s important to review your coverage every time your policy period ends. (Check the upper of the car insurance declarations sheet for information about your policy period.) When the car insurance is renewed while it is under coverage, the policyholder may be eligible for a lower premium if certain conditions are met kept by the insurance provider. The individual can also shop around for another policy from a different insurance provider if at the of the year it is felt like the premium is too much for the purchased policy.

Which documents are needed when applying for Car Insurance?

For people applying for car insurance in Pakistan a person is required to submit a copy of their car’s complete registration, Computerized National Identity Card (CNIC) and photographs of the current condition of the car. The completion of all the required paperwork is quite a critical part of the whole process in case if the policyholder doesn’t know how to get the car covered in Pakistan, there are many websites of the insurance providers that have made the deed easier.

What are the ways to cut down on car insurance expenses?

When buying a car, one important thing that needs to be kept in mind is it would have a relative cost to the insurance premium as well and ensuring that the insurance expense that is pocket-friendly for you
So one should try buying a vehicle that has annual insurance expenses easily manageable by an individual. With the increase in vehicle prices in Pakistan, the cost of their insurance coverage is also on the rise. Nevertheless, it may be equal to only 2-3% of the total cost of your vehicle but one thing to bear in mind is that the car insurance plan purchased needs to be renewed annually, which means it’s a recurring or a continued expense. Below mentioned are some ways an individual can choose a car insurance plan that is light on the pocket and works best to fulfil the need of the individual.

1. A person should try taking care of minor repairs required in the car themselves instead of asking the car insurance company to pay the bill. It will effectively lower the annual car insurance expenses.
2. A year without any raised car insurance claim will make an individual eligible for no claim bonus, bringing down the cost of the car insurance replenishment.
3. One needs to handy with the research to find a car insurance plan online with the lowest premium amount.
4. Purchase a vehicle that has an annual insurance overhead easily manageable. Since the rate of insurance premium is directly related to the cost of the car, a reasonable and low priced car will usually have a low insurance rate.

What is usually not covered in car insurance in Pakistan?

Car Insurance Companies in Pakistan usually do not provide coverage for batteries and tyres as well as the damage caused to a car because of the incident of short circuit or any damage arising out of lack of maintenance issue.
The other additional coverages which can be procured include:
1. Roadside assistance coverage: Usually not needed if you already have insurance that provides roadside assistance and another service it’s an add-on service that can be purchased with car insurance.
2. Rental car reimbursement: When the car insured is in the shop or you’re waiting for it to be replaced, your insurance provider may cover the cost of renting a car while your car is in for repairs.
Once you know how much coverage you need in each component, it’s time to get car insurance quotes.

How car insurance premiums are calculated?

Choosing a deductible

When an individual chooses a car insurance policy, they’ll be asked to choose their deductible, which is the amount they’ll pay to settle a claim before the insurance provider picks up the rest. Deductibles are evaluated per coverage type, and the accountability coverage never has a deductible, while comprehensive and collision coverage almost always require one.
Commonly deductibles are lesser in the beginning when the car is brand-new the car has a lower deductible means a higher premium because it increases the carrier’s obligation to you in the event of a claim. When choosing your car insurance policy, see how much each deductible will cost the policyholder. It might mean deductible is the amount that an individual will be saving a little money now versus choosing a little higher deductible and saving a lot of money later.

Car insurance companies handle insuring different types of cars in different ways.

New cars vs. older cars: Insurance companies will feature in the age of the car, as well as its mileage when determining what kind of coverage an individual needs.
Luxury, glamorous, and performance cars: When choosing a car insurance policy, an individual needs to check how the insurance covers luxury and performance cars. It’ll be more expensive to insure a luxury car like a Lamborghini than a typical mid-size sedan, and some insurance providers may not cover luxury or exotic cars at all.
Collector cars: Collector cars can be difficult to get covered, so be sure to shop around until you find an insurance provider who knows how to handle them.
If someone has leased their car or purchased it with a car loan, you’ll be required to purchase accidental and comp insurance. That’s to protect the bank’s investment; if the car gets totalled or stolen, the bank investment at least has some alternative. However, if an individual owns a car, you should still get these coverages to protect your own assets.

How to find a discount on Car Insurance?

When speaking with insurance providers, one should ask about discounts. Most insurance providers will offer car insurance discounts off your premiums. The available discounts shouldn’t be the make-or-break decision when cherry-picking a car insurance policy, as the more important decision is your coverage. But some of these discounts may include some offers that are promotional ones being given out to my insurance provider.
The discounts should never be the last straw in making the decision, the decision parameters should be based on the market value of the company, the ability of the company to pay out the claim, the level of customer services provided by the insurance provider and last but not the least the premium rate of the car insurance policy.

We have put together a comprehensive car insurance guide to help you find your way during the process of purchasing car insurance. COVID-19 has changed the way the world works but we at Smartchoice have got you covered for all your car insurance needs. This comprehensive guide to car insurance is a one-stop shop for every question related to car insurance in Pakistan for the year 2021 and 2022.

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