Is your car insured? If not, you should start thinking about buying a vehicle insurance policy. The reason is, this insurance is very important to protect vehicle owners from the risk of financial loss due to damage or vehicle theft. However, before choosing a policy, it would be nice if you first understood the price of car insurance.
What Is Car Insurance?
Before talking further about the price of car insurance, there’s nothing wrong if we first understand the meaning of car insurance. Just as the name suggests, car insurance is insurance that provides financial protection for costs that must be borne by the vehicle owner due to damage or loss of the vehicle.
Car insurance consists of two types, namely all risk insurance and total loss only (TLO). All risk insurance is car insurance that covers minor damage ranging from abrasions to total damage or loss. Meanwhile, TLO car insurance is insurance that provides protection for vehicles from the risk of loss.
Car Insurance coverage
The price of car insurance is generally adjusted according to the coverage benefits provided. Usually, vehicle insurance companies, especially cars, provide protection for four-wheeled vehicles from various types of losses, such as:
- Collision, collision, overturned, mired, to slip.
- Fire, including the result of lightning.
- Evil act.
- Theft.
- Other loss risks.
In addition to the five conditions above, insurance participants can also expand their benefits by adding premiums to cover the following:
- Floods and hurricanes.
- Earthquakes and tsunamis.
- Chaos and destruction.
- Legal responsibility to third parties.
Meanwhile, the General Insurance Association of Indonesia, recorded a number of risk losses that cannot be covered by car insurance. For example, loss or damage to a car caused during a car driving practice. In addition, other losses that cannot be covered by vehicle insurance are losses when the car is stolen by a family member or relative.
How Much Does Car Insurance Cost?
As previously mentioned, the price of car insurance is adjusted according to the protection provided. The price range for all risk and TLO vehicle insurance is also generally different. The following is an explanation of the price of these protection products.
All Risk Car Insurance Prices
The price of all risk car insurance is known to be more expensive than TLO insurance. Generally, the rates for these insurance products range from 1.05-4.2% of the price of the car and the region. In order to better understand the price of all risk car insurance, here is an example.
A vehicle owner has a car worth IDR 250 million. The premium paid by the person concerned is 2% of the price of the car. Thus, the insurance fee that must be paid by the owner of the vehicle is IDR 5 million per year.