Motor insurance is a tough sale in Pakistan. Most people do not afford insurance, but some do it in compulsion when they buy vehicle on installments. According to the General Insurance Company represent around 0.3% of Pakistan’s GDP as compared to 4.5% in the United States, and 2.2% in Japan. Maybe it is the deficiency of awareness between our young people or perhaps it is just the cost-driven nature of our economy The National Road Safety Secretariat of Pakistan estimates the economic costs of road accidents and injuries at over Rs: 100 billion per year.
Of course, these damages are more than just numbers; it contains stern injuries and the loss of lives. Related to these costs, the price of Motor Insurance In Pakistan paying is a little bit. No, getting Motor Insurance does not surety of accident-free roads, but it does allow more people to be compensated for losses caused by accidents. It also encourages road safety, and most importantly, it is part of our law.
Motor Insurance In Pakistan
1: Under the 1965 Motor Vehicles Ordinance, it is compulsory for all vehicle owners to obtain third party motor insurance. Third party insurance is the minimum level of insurance that can be obtained on a vehicle. If you cause damage to someone else’s property or injure them while driving, that person receives appropriate compensation. To protect against damage to yourself and your car, comprehensive insurance is required. As our population, infrastructure, and traffic grow, we encourage everyone to protect themselves and others against the increasing risks of driving. It can cost between Rs 45,000 – 60,000 to ensure a new Toyota Corolla, and a simple paint job and replacement of a bumper can sometimes cost more than that.
2: According to a recent PakWheels survey of around 11,000 respondents, only 25% had their cars insured. The law only seems to be enforced when financing a vehicle through a bank. Otherwise, auto insurance is often perceived as an unnecessary expense. Considering there are over 25,000 fatalities and countless other losses due to road accidents in Pakistan every year, more should be done to promote road safety and the use of auto insurance. Using our web platform, you can scan and compare all the options in the market within a matter of seconds and get the best deal out there!
3: All insurance providers in Pakistan provide the option of installing a tracker at an additional cost (mandatory for some car models, depending on the insurance company). This tracker is capable of tracking a car’s location and speed across the country and can also be used to shut down the car remotely in the event of theft. Companies charge an installation fee for the tracker and then either add a flat yearly fee or factor in the fee as part of the premium. It is important to note that in some cases (e.g. TPL Insurance) the tracker remains the insurance company’s property and cannot be resold by the car. When using our search engine, you have the option of including a tracker and compare all the prices in one place.
4: Depreciation is charged for insurance purposes, typically at 10% annually in Pakistan from the date of manufacture of the vehicle. This applies to cases where any parts of the vehicle are damaged in an accident and need to be repaired. For example, if a part of the vehicle is damaged after 5 years of having insurance, the insurance company will only pay 50% of the cost of the repair. The rest will be borne by the car owner. However, this depreciation element can be waived for an additional charge, which is recommended for new cars.
5: In Pakistan, insurance premiums are based only on the market value, model, make and age of the vehicle and normally range from 3% – 5% (annually) of the value of the vehicle. Auto insurance is much more affordable in Pakistan as opposed to developed economies like the US and UK where other factors such as the type of car (i.e. sports car vs sedan), driver’s age, experience, accident history and credit score are given more weight.
For example, an 18-year-old with a brand new car in the UK would have to pay a much higher premium because of his/her age and lack of experience. In Pakistan, it simply depends on the age and value of the car and nature of the driver does not impact the premium. However, no claims bonuses are available for insured drivers who have a clean record, providing a monetary incentive to drive safely.
If we consider the security circumstances in Pakistan and the exponential rate at which traffic is growing, insurance should be regarded as a necessity. The benefits of comprehensive auto insurance far outweigh the economic costs. It provides a sense of safety and security and protects you from loss not just from road accidents, but also fires, floods, terrorism, riots, and theft. Car Insurance plays an important role in the overall push to make our roads safer. Cars in Pakistan are one of the most expensive commodities – is it not worth spending 5% more to protect it?