So you have bought your first car and are worried about its safety. The next logical step is to get it insured. Car thefts are on the rise throughout the country. So you want to make sure your investment is safe. In such cases of theft, there is a very slim chance you will get your vehicle back. And even if you do get it back, it will be in a miserable condition most of the time. According to a report, around 21 thousand vehicles are being stolen yearly, and the total worth of stolen cars comes up to something around staggering Rs5bn.
Also, even if you are lucky, and no one is after your vehicle, considering the road and traffic conditions in Pakistan, it is very common to end up in a fender bender. So having a car insurance can solve all of such things. It’s a piece of mind. But what do you need in case you want to get your cars insured?
I had a little chat with a representative of an insurance company a day ago. I asked him a few basic questions, and I will try to write as much as he told us about the insurance procedure, standards, and general industry practices. Here it goes-
How does auto insurance work?
It’s fairly simple. We charge you a little money according to the worth of the car and in the case of an accident or theft, we reimburse you your amount.
What is the percentage rate?
Our company asks for 3 percent of the total amount of the car. Also then there is depreciation on the parts of the car.
Is it an industry standard and what depreciation?
No, not at all. Some will insure it for as low as 2 percent of the total worth of the car. Also, in case you are buying parts for the car in case of an accident, we ask the client to pay a certain amount on the parts for their pockets. For example, for the first year, there is 10% depreciation. A car part that cost Rs1000, the client will pay Rs100 and we will pat rest of Rs900. After 7 years, the depreciation is 70%. The client will have to bear 70% cost of parts. But labour etc is of course will be covered by us.
A customer walks into your office asking for a car insurance, what do you require from him/her for insurance?
We will ask for a copy of his car’s registration papers, a copy of a valid CNIC, and detailed photos of the car, from all sides and interior as well.
Why photos of the car?
It’s so that we know what we are paying for in case there is theft. Sometimes people try to defraud the companies by swapping in the parts etc.
And if someone has updated something in the car, let’s say a sound system, he will have to tell you about the upgrade?
Yes, always. We will take new photos of the car.
What are the things that are not covered in a typical car insurance?
We do not insure tyres and batteries. And also we will not cover damages occurred due to short circuit fire.
What is the first step if someone calls in an accident and wants you to pay for the repairs?
Our surveyor will have a look at the car and the damage. We will ask for a valid driving license of the person who was driving the car at the time of an accident. And then we give them two options, either hand over the car to us and we will get it fixed for you, or you can take it to a workshop of your liking. He will negotiate an amount with you and the workshop and pay you the amount.
How long does it take to reimburse the amount?
We take around 15 to 20 days.
Is it an industry standard?
No, not at all. Some companies take months.
Do you ever reject a customer?
No, we don’t. There is so much competition in the market among the companies that we cannot afford a customer to simply walk out on us.
(I asked this question because, in some countries, insurance companies can reject the customer if they think they will be trouble. They are usually young ‘boy racer’ type drivers. Also, even if they do agree to insure your car, the company will charge a lot of money for that)
What about cars? Which are on the hit-list of car thieves?
We don’t insure Toyota Corolla without a tracker. And it has become kind of an unofficial industry standard. It’s most prone to theft and no insurance company even goes near a Corolla without a tracker. Also, the second car on the list is Suzuki Mehran. It is also very prone to theft. And lately, Suzuki Cultus has also joined the list.
Who are the troublemakers? Or ‘bad clients’ in simple?
Usually, rent a car, people. They try to scam insurance companies every now and then.
How do you prevent from a customer that could be a potential fraudster?
The insurance companies are connected in a way. We check the car against its registration number throughout the circle to see if it has been to an insurance company before.
So is it fair to say that you guys take a risk every time you take on a new client?
Yes, that is true. But as I said before, there is so much competition that we can’t lose a client on a hunch or a feeling.
These are some of the questions I had the time to ask in out brief meeting. I hope it will help answer some of your questions