Car Insurance in Pakistan: Policies, Rates & Benefits

Car Insurance in Pakistan: Policies, Rates & Benefits Blog Image

Car snatching or car theft is a major problem for citizens of Pakistan. Over the past few years, there has been a rise in such incidents as the market in Balochistan and remote parts of Sindh has a great demand for such vehicles (as well as stolen car parts). Markets in such areas purchase the stolen vehicles and sell them at lower rates. 

In most cases, car owners have to fight for a long period of time to recover their assets through the police or related departments. 

Another major problem that most vehicle owners face is road accidents. These can cost a lot of money in the form of repairs.

A feasible solution to such problems is vehicle insurance. Vehicle owners cannot only claim the amount of the lost vehicle but can also claim the money for repairs in case of an accident.

Graana.com, Pakistan’s smartest property portal, has compiled a guide to help you understand rates, policies, and types of car insurance in Pakistan.

 

What Is Car Insurance?

 

Car Insurance Policy Papers with Car Key and Toy Car

 

Car insurance is essentially an agreement between an insurance company and a car owner, according to which the company provides protection against financial losses resulting from any accident or damage to the vehicle in exchange for a premium that the car owner pays at the time of purchase.

Car insurance comes in several types according to the plan chosen by the vehicle owners. Most insurances cover:

  • Value of vehicle in case of vehicle theft
  • Vehicle damage repair charges
  • Hospital charges in case of an accident
  • Cost of parts’ replacement

 

How Does Auto Insurance Work in Pakistan?

Auto insurance in Pakistan follows a set pattern that is mostly based on the policies of the insurance companies and other legal authorities involved. Most top insurance firms in Pakistan charge 2-3% of the total cost of the vehicle. Moreover, each time an accident occurs or any part of the car needs to be replaced, the owner has to pay some depreciation costs.

According to standard practices, the depreciation cost increases every year. Factors such as the auto market, economy of the country, and inflation rate also affect the depreciation cost. So, the owners must keep track of these aspects.

 

Types of Car Insurance Policies

The following are three different types of car insurance policies offered by most insurance companies:

  • Comprehensive car insurance
  • Third-party liability car insurance
  • Collision car insurance

Let’s discuss these policies in detail.

 

Comprehensive Car Insurance

 

Comprehensive Car Insurance Policy Explainer Infographic

 

Comprehensive car insurance covers everything from the cost of damage to any injuries and damages to a third-party vehicle. The insurance company covers damages to the vehicle under any circumstances.

 

Benefits of Comprehensive Car Insurance

Comprehensive car insurance offers the highest level of protection. The following are some of its benefits:

  • Owners can claim damages that happened because of their faults.
  • Insurance companies pay money in case of vehicle theft.
  • It covers lawsuit charges and legal fees if you are involved in an accident.

 

Third-Party Liability Car Insurance

Third-party liability car insurance covers the cost of damages or injuries to a third-party vehicle or person in cases where you are involved in an accident. It is the lowest level of cover that a person can take for financial security.

 

Collision Car Insurance

Collision car insurance covers the costs of damages to your vehicle in case you had an accident. However, Pakistan’s collision car insurance policies usually do not cover damages to vehicles in case of natural disasters or any other extreme weather conditions.

 

Things Not Covered in Collision Car Insurance Policy

The following aspects are not covered in this policy:

  • Theft or vandalism
  • Accidents with animals
  • Injuries to third-party drivers involved in an accident
  • Parts’ replacements

This policy works in the form of deduction, which means the amount you have paid initially for your vehicle’s insurance is used to cover all the damages.

 

How to Choose the Right Car Insurance Company

 

Person securing a toy car with his hand

 

The importance of car insurance is increasing day by day. Most people look for relatively cheaper insurance policies that offer greater returns. However, during the last few months, car insurance rates have gone sky-high due to rising inflation. Moreover, changing supply chains and increasing rates of road accidents have also caused insurance rates to rise.

Hence, while choosing a car insurance company in Pakistan, you must keep the following factors in mind:

  • Determine your needs first
  • Make a list of authorised insurance companies
  • Check third-party ratings
  • Consider their experience
  • Compare insurance quotes
  • Look for the services they offer
  • Get your car inspected for an estimate of the coverage that you may need in the future
  • Check for discounts offered by different car insurance companies
  • Choose the company that has minimum requirements·  
  • Consider insurance companies that offer the lowest premium for different types and conditions of the vehicle

 

Documents Needed to Apply for Car Insurance in Pakistan

Applying for car insurance in Pakistan generally requires the following documents:

  • 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

 

How to Claim Car Insurance in Pakistan

 

Car Insurance Claim Form

 

When you are about to apply for car insurance, you must go through all the documents, terms and conditions first. It will give you an idea of what is covered in your insurance policy and what is not.

You can follow the given procedure to claim your insurance:

  • In case of an accident, you have to collect information about the incurred damages.
  • File a report at the police station to complete the legal procedure.
  • Call your insurance company, verify your identification through the policy number, and inform them about the accident.
  • Give them your inspection report along with a copy of the FIR.
  • Once they verify the details, a surveyor will visit you, check all the damages, and make an estimate of the total cost of repairs.
  • The company will either take your vehicle to one of their authorised service centres or offer you to take the vehicle to any service station of your choice.
  • Before moving ahead with the repairs, the company will inform you about the damages that they will cover.
  • After verification, inspection, and repair, you will have to produce copies of insurance documents so the company can pay for the repairs and update the record.

 

Methods of Insurance Reimbursements

In Pakistan, insurance companies usually follow two methods for insurance reimbursements:

  • If you pay for the damages yourself, you will have to produce the documents to the insurance company. They will reimburse your payment later on or update your current insurance plan.
  • In case you are unable to pay for the repairs, the company will pay for the workshop directly.

 

List of Insurance Companies in Pakistan

Pakistan has several reputable auto insurance companies that provide excellent services. These companies have simple procedures and require little documentation. 

  • IGI Insurance
  • EFU General
  • Adamjee Insurance
  • Jubilee Insurance
  • Askari Insurance Company Ltd.
  • State Life Insurance

For information about car insurance in Pakistan, visit Graana Blog.

 

About Muhammad Jahanzaib

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