Fundamentals of Car Insurance

Car insurance is a growing industry in Pakistan having a number of insurance providers competing for the business in major cities of Pakistan. Each car insurance provider is offering various insurance plans and premium packages according to the customer profiles. As a customer when purchasing a car insurance policy, it is very time consuming to assess every car insurance company and their available products in order to get an ideal deal. Despite the aggressive competition, the lack of comprehensive and up-to-date information about the car insurance is alarming. Potential auto insurance buyers do not have access to the correct source of knowledge to make an informed decision.

We have been closely following the various trends of car insurance in Pakistan. After observing the state of scarce information, we decided to gather and publish authentic facts and information about the product and how this is offered in Pakistan. Mawazna.com is a leading car insurance comparison platform in Pakistan and aims to provide a comprehensive information repository that can help people in making the right choice when investing in car insurance. The following are some of the fundamental questions every car insurance customer has in mind when planning to purchase a policy:

Why we need car insurance in Pakistan?

Car insurance takes away the monetary burden off your shoulder in case of a car accident, damage or theft. Nowadays, it is easier for the car owner to get their vehicle insured as there are many auto insurance providers in the market. The fierce competition has given way for competitive insurance packages that give maximum benefit to the insured. In addition to that, Pakistan is a developing nation and its infrastructure is still developing in several large cities. Road conditions and driving standards can be very challenging at times in Pakistan resulting in growing traffic accidents. Even if you are a careful driver, you may have to pay for another person’s negligence, therefore having a car insurance will certainly help you to address all such risks with peace of mind.

Is it mandatory in Pakistan to have car insurance to drive legally?

Yes, car insurance is mandatory in Pakistan. However, as per the traffic laws of Pakistan, a driver must have at least third party liability insurance. Otherwise, he will be charged with a fine or imprisonment for violating this crucial traffic rule. Third party liability insurance provides cover for car damage, property damage, bodily injury, and death caused by your vehicle to another person or his property.

Key elements that may impact the premium of your car insurance in Pakistan

Insurance companies in Pakistan take into account multiple factors before deciding the annual premium of your car. Following are the key factors that may impact the premium of your car insurance in Pakistan;

- The value of your vehicle or Insured’s Estimated Value

- Type of vehicle (Make & Model)

- Age of the vehicle

- Area of Use and where it is parked during the day & night

- Tracker or without tracker

Is the car insurance policy issued on registered owner only?

Yes, the insurance policy is issued only on the name of registered owner of the vehicle. The insurance policy can also be purchased for the unregistered vehicle but the owner has to provide the registration documents within 15 days to the insurance company. Otherwise, the car insurance policy is considered void.

Do both husband and wife need to have separate car insurance in Pakistan to drive a single car?

No, a single car insurance policy will be adequate for both husband and wife. Insurance companies in Pakistan provide car insurance policy based on the vehicle rather than the person. However, they require the names and details of the registered owner of vehicle and drivers who will drive the car.

Do Insurers ask for driving history before issuing a policy?

Yes, the car insurance proposal form has multiple questions about the vehicle and the insured (the person who is buying car insurance policy for his car). Insurance providers may also ask for details about previous accidents to calculate the risk and associated premium. They also inspect the vehicle thoroughly before issuing a policy. The driving history of all persons, who usually drive the car, will be required before the finalization of the car insurance policy.

Do you need a separate car insurance policy for each of your car?

Yes, a single insurance policy will provide cover for only one vehicle. You need to buy different insurance policies for different vehicles. Some insurance providers may allocate you a single insurance policy number for multiple vehicles but you have to pay the premium for each car separately.

Does your car insurance cover you all over Pakistan or based on provinces?

Yes, most insurance providers cover the insured vehicle across the Pakistan. However, some have excluded Balochistan and other sensitive areas due to security reasons. If the insured needs coverage for any sensitive location, s/he can request the insurance provider but additional charges are applied by insurers for such policy provisions.

Can you get short term car insurance cover from Insurers in Pakistan?

No, there is no short term car insurance cover available from insurers in Pakistan. However, the insured has the facility to cancel the insurance policy at any time during a policy period and may receive a refund if he had not claimed for an accident during the policy period and there are at least 120 days left until the expiration of the car insurance policy.

What are the car insurance requirements when you are renting a car?

Upon renting a car you do not need to buy its individual insurance on your name. A car being used as part of car rental business must have already been insured under correct insurance category by the legitimate owners of that car or the car rental company.

Note: The above-mentioned answers have been collected from different insurance providers in Pakistan, car insurance agents, and after reviewing the current traffic rules and regulations of Pakistan. These FAQs represent the general norms of Pakistan car insurance industry. However, it should be kept in mind that each insurance provider may have their own certain requirements, therefore you must validate the policy information and such questions with Insurance companies before you purchase a policy cover.

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