Quite a number of us may not realise the importance of having our vehicles insured unless an accident occurs which is when it would be too late to revert the damages, and that too, financial! Over 3,000 accidents occur in Pakistan annually and are rising at an alarming rate. Moreover, it is statistically proven that you will be part of at least one accident in your life.
Metropolitan cities, given the chaotic traffic situation during rush hours, poorly maintained vehicles, and reckless driving often witness car damages which seem to have become a norm now. Hence, car insurance is of utmost importance for anyone who owns a car.
A car insurance policy is a contract between the vehicle owner and the insurance company itself that provides a cushion against financial loss resulting from a car theft or accident and in some cases natural disasters; Karachi’s torrential rains in August 2020 are an example. The insurance company agrees to pay for the losses as part of the outlined policy in exchange for a premium that you pay.
Below are some of the most important reasons why car insurance is important for you and your family:
Accident cover and weather damage:
Depending on the policy, you can be provided with a personal accident cover for a time period that has already been predetermined. Such a cover can be utlised for other passengers as well.
In case of an accident, you end up paying less, provided you had an insurance policy as opposed to never having one and hence save a major blow to your pocket. Thus, you pay a small amount for a protection cover today than having to pay a lump sum for major damages tomorrow. Last year’s monsoon rains in Karachi left many vehicles stranded and damaged, and an insurance policy came in handy for those who had it to cover the cost of repairs.
Third party liability:
If your vehicle is involved in an accident that causes any damage to the property of a third party then it is covered under the car insurance policy. You can be protected against claims others can make against you for instance and legal defence can be part of the deal.
Helps avoid car devaluation:
Having a comprehensive insurance plan can safeguard your car against unforeseen accidental occurrences and help prolong its value and life, thus eventually saving you money over a certain period of time. Similarly, you will also be in a better position to sell your car at the prevailing market rate.
You can have your car replaced if stolen:
If you have financed your car, your lender (in this case mostly banks), would require you to have an insurance policy. And it is after all, an asset that you cannot afford to buy again and again so why not have it covered and have peace of mind?
Most often, the insurance company would probably not pay you for a brand new car, but however, would instead reimburse you against the current value of your car. It is advisable to have a thorough understanding of the policy that you are purchasing.
It is advisable that you get a comprehensive insurance policy for a cover against a number of such events mentioned above so that any massive financial burden is avoided. To sum it up, you need to have coverage against ‘personal accident risk’, ‘damage risk’, and ‘third party liability’.