A Guide to Choosing the Best Vehicle Insurance

vehicle insurance

Vehicle insurance is the protection provided in the form of compensation if there is a risk of damage to motorized vehicles such as cars and motorbikes.

Unfortunately, there are still many who think that this type of insurance is not a necessity and is actually considered detrimental because they have to pay premiums regularly.

In fact, when there is a risk, the repair costs will be quite large, even reaching millions of rupiah. For example, collisions, scratches, slips, and losses due to theft. Therefore, insurance can be a solution to protect you from financial losses.

What Is Motor Vehicle Insurance?

An insurance product that provides protection against loss and/or damages to motorized vehicles for various reasons specified in the insurance policy agreement. There are two most popular types of auto insurance:

  • Car insurance
  • Motorcycle Insurance

Generally, several causes of events are borne by insurance companies against motorized vehicle objects, both four-wheeled and two-wheeled, including such:

  • Crash
  • Rubbed
  • Evil deeds
  • Theft, and
  • Fire

Apart from conventional vehicle insurance, now insurance with sharia principles also exists. So, don't think that sharia insurance is only available for life insurance. Because currently there is vehicle sharia insurance based on Islam principles.

As it is known that there are two types of insurance for motor vehicles. First is comprehensive insurance or popularly known as all risk even though some insurance companies no longer use this term.

The second is a total loss only insurance or abbreviated as TLO. From the meaning, we can actually guess the difference between the two.

The difference between TLO Insurance and Comprehensive Insurance (All Risk)

Comprehensive insurance provides comprehensive protection which also includes protection provided by TLO insurance. Conversely, TLO insurance only provides partial protection from comprehensive insurance.

Well, this is the difference between comprehensive insurance and TLO insurance. TLO insurance only guarantees compensation for the cost of compensation if the motor vehicle that is the object of insurance is damaged by or more than 75 percent.

The percentage size is not determined by you, but there is a separate calculation from the expert. In simple terms, the damage is equal to or above 75 percent if the motorized vehicle can no longer be used normally.
It is different if the car is lost due to plunder or theft. It is certain that you have lost over 75 percent.

However, 100 percent reimbursement of TLO insurance is often misunderstood by consumers. 100 percent replacement applies if you make a TLO insurance claim based on the price of the motor vehicle in the same year.

This can be proven by a purchase invoice.

The insurance company will reimburse the lost car according to the same type and year of production as the lost car.

This means that when you make a TLO insurance claim, it doesn't mean you will get a new car from the factory. But cars that are equal in price, year of production, and type with cars that are lost or damaged are more than 75 percent.

The protection is only 75 percent damage and loss. Meanwhile, for minor damage such as scratches or dents, there will be no replacement. So, what's the benefit of TLO insurance?

One of them is the TLO insurance premium, which you have to pay, which is much cheaper than comprehensive insurance.

When to Buy Comprehensive Insurance?

If asked about this, you should include comprehensive insurance when buying a new or brand new motor vehicle from the factory.

Meanwhile, TLO insurance is more suitable for used vehicles or vehicles that are still under 10 years old.

The advantage of comprehensive insurance clearly provides comprehensive protection. Starting from collisions, dents, scratches, and even losses. Some insurance policies include expansion products such as losses due to natural disasters, terrorism, and losses caused by riots.

For example, if you were caught in a sea of ​​raging football fans that damaged your vehicle, you could file a claim for damage caused.

That way, you will be calmer about having vehicle insurance for whatever risks you have to face at a later date.

Determinants of the size of the vehicle insurance premium

According to the Financial Services Authority, there are several factors that affect the amount of premium, including the following:

  • Type of motor vehicle
  • The physical condition of the motorized vehicle
  • Motor vehicle age
  • Location of use of motorized vehicles
  • Its function and use
  • Type of coverage, and
  • Experience the loss event ever experienced

Well, some of these factors provide clarity why the place where motorized vehicles are used also affects the size of the insurance premium.

For example, Washington, D.C. as the capital city may have a greater risk compared to other regions. That is why motor vehicle insurance premiums in each region vary in nominal.

Motor vehicle insurance is not only required individually but is also required by companies or financial institutions that provide motor vehicle ownership credit.

That is why motor vehicle installments generally include the cost of insurance premiums so that the nominal is bigger.

For lending companies, it is very important to maintain assets as long as credit installments have not been paid off. In another case, if the motor vehicle has been paid off, the credit company no longer has the obligation to reinsure it.

This will become the authority of the vehicle owner. Usually, vehicle installments are completed in year 3 or year 5. Stepping on the following year, the vehicle owner can extend the policy in accordance with the applicable terms and conditions.

Deductible costs, costs for filing claims due to partial damages

Another important thing to know in comprehensive insurance is the cost of the deductible per incident.

For example, if your vehicle is dented, the insurance company will not necessarily provide compensation or repairs. However, you will be asked to pay a certain amount when making a claim.

This deductible or reduction fee actually has its own purpose.

Among other things, so that vehicle owners can be more careful when driving a vehicle. In addition, so that there is no claim process that the loss value is smaller so that it repeatedly submits claims.

Well, the table below can be used as a guide for calculating motor vehicle insurance premiums for both comprehensive insurance and TLO insurance.

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