The automobile industry in Pakistan has been growing along with the growth in population. People are getting more cars as it is becoming a necessity for easy commuting in our growing cities. As cars increase on our roads, so does the need to insure them from accidents and other damages.
Auto insurance in Pakistan follows an established arrangement that is usually dependent on the insurance company’s policies and other legal and regulatory authorities involved. The top insurance companies in Pakistan charge an estimated 2-3% of the total cost of the vehicle as their insurance cost.
Every time an accident occurs, or a part of the car needs to be replaced, the owner has to pay some depreciation costs. As per standard practices, the depreciation cost increases every year. Factors like the auto market, the economy of the country, and the inflation rate also affect the depreciation cost. So, the owners need to keep track of these factors.
Third-Party Liability Coverage in Car Insurance
Third-party liability insurance is a type of insurance coverage that protects you financially if you’re considered responsible for damages or injury to another person or their car. This type of coverage is available for both home and car insurance.
Also known as third-party car insurance, this form of insurance covers loss or damage to your car and injuries sustained by you and your passengers. It also covers any loss or damage to the property of third parties. The amount of coverage for medical expenses and damage to the third party’s property differs according to the type of car insurance you select.
Third-party insurance is not compulsory in Pakistan, although in some situations, it is unavoidable. For example, if you drive a car that is not insured, then you will be obligated to get third-party insurance. Similarly, if you get a car on rent or lease, the owner will ask you to get third-party insurance. Third-party insurance protects the other car owners and pedestrians from any financial losses due to your car.
Losses not Covered by Third-Party Insurance
Third-party insurance does not cover damage caused by natural factors like floods, earthquakes, or fires. In such cases, comprehensive insurance will cover these losses. It means that if your car is damaged or destroyed due to any natural disaster, only comprehensive insurance will cover these losses.
Third-party car insurance covers damage to other cars as the result of an accident that’s your fault. It is not responsible for damage to your car. Nor does it cover the theft of your vehicle. The insurance will pay for the damaged vehicle, property, and passenger/driver of the Third-party. It is the lowest level of cover, protecting you against damage caused by you or one of your passengers to others.
Despite the rising costs, car insurance is essential if you want to drive your car without any worries. This is why third-party insurance is attractive for many, as it protects them from expenses related to other car damages in an accident.
Tips to Get the Right Insurance Policy For Your Car
- Compare quotes offered by different companies for car insurance online.
- Judge the condition of your car and required coverage before picking any insurance plans.
- Check out discounts offered by car insurance companies in Pakistan when applying for a car insurance plan to save some extra money.
- When buying a new or used car, you must buy insurance coverage. Please note that the insurance cover of the previous owner becomes invalid on the sale of the vehicle.
- The insured value or sum insured depends on the vehicle’s market value. The maximum compensation you will receive is the market value of the vehicle.
- Try to avoid over insurance. This occurs when the insurance value of the car in the policy is greater than the market value of the vehicle.
- Under- insurance occurs if the sum insured is less than the market value. If you are self-insuring, the difference will only be compensated partially. For example, if you have insured your vehicle up to 70% of the market value, the insurance company will only pay 70% of the total repair cost in case of an accident.
Documents Needed to Apply for Car Insurance in Pakistan
You need the following documents when applying for car insurance in Pakistan:
- Copy of original driver’s licence
- Car insurance agreement
- Slips or receipts for reimbursement payments
- Copy of vehicle’s registration card
- Copy of owner’s CNIC
- Photos of the current vehicle condition
- An inspection report certified by some authentic car dealer
Read the policy document and thoroughly understand all the terms and conditions of the policy contract before signing it. If there is something you do not understand, get clarification from your insurance agent or directly from the insurance company.
Be thoroughly satisfied that you have understood all aspects of your policy. You should especially look for what will be covered, under what circumstances, and the procedures for making claims.
Sadia Zaheer holds a Masters in Business Administration from IBA, Karachi. After working in several financial institutions in Client Management, Corporate Lending, Islamic Banking and Product Management she jumped careers to pursue a career in writing.
She is a Finance, Business and HR Development writer with four years of experience. She reads a lot and takes care of her multiple cats to remain calm.