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Choosing the Right Car Insurance: A Comprehensive Guide


Car insurance is a fundamental necessity for every vehicle owner. The reason? Four-wheeled vehicles like cars are often susceptible to various risks, ranging from theft to accidents. Car insurance acts as a safety net, alleviating the worries of vehicle owners. It provides compensation for losses or damages incurred by the motor vehicle due to incidents such as collisions, slipping, malicious acts, theft, and even fires.

Types of Car Insurance and Their Benefits

Car insurance is not a new concept. In Indonesia, car insurance is divided into several types that can be tailored to specific needs. Before making a decision about which insurance product to choose, it's essential to understand the differences between these types and their associated benefits.

1. Comprehensive Car Insurance (All Risk)

Comprehensive car insurance, also known as All Risk insurance, offers extensive coverage for various damages and losses. It includes minor damages like scratches and dents, as well as major damages resulting from collisions that alter the car's body shape. This insurance also protects against theft and natural disasters such as floods or earthquakes. However, all damages or losses must be specified in the policy document. Due to its comprehensive protection, the premiums for All Risk car insurance are generally higher than other types like Total Loss Only (TLO).

2. Total Loss Only (TLO) Insurance

As the name suggests, Total Loss Only (TLO) insurance provides coverage for the risk of loss. TLO insurance ensures protection against theft and damages if the repair costs are estimated to be equal to or exceed 75% of the vehicle's current market value before the loss. If the car is lost due to theft, it is considered a total loss, and TLO insurance covers the loss. However, TLO insurance does not provide coverage for minor damages below the 75% threshold; the owner has to bear the repair or replacement costs. Despite this limitation, TLO insurance offers lower premiums compared to All Risk insurance.

3. Combined Insurance (Combination)

Combined insurance, also known as Combination Insurance, merges All Risk and TLO insurances. However, this type of insurance is only available for financed vehicles. In the first year, the vehicle is fully covered under All Risk insurance, and from the following year, only TLO insurance is applicable.

4. Insurance Extensions (Rider)

Apart from the basic insurances mentioned above, policyholders can opt for additional coverage extensions, besides the coverage for accidents or losses. These extensions include protection against floods, hurricanes, earthquakes, riots, terrorism, sabotage, third-party liability, passenger personal accident, and legal liability towards passengers.

5. Collision Coverage Insurance

Collision Coverage Insurance is specifically designed to cover medical expenses resulting from accidents caused by the driver. Additionally, this insurance also covers repair costs and compensations according to the car's market value.

Now that you are aware of these different types of car insurances, which one are you interested in purchasing? Make an informed choice to safeguard your valuable asset.