Auto insurance companies have two kinds of insurance services for the car :
- the comprehensive / all risk
- and total loss only.
Each service has a different feature, but equally useful.
All risk auto insurance protects the car from the risk of abrasions until it is gone. While total loss insurance only guarantee losses due to loss and damage of more than 75 % until the car can not drive anymore.
Because of the difference in dependents, the premium paid is different. Looking at the wider coverage of all risk insurance, the premium is bigger than the total loss only.
But the amount of this premium is commensurate with the benefits received by the policyholder. Because if the car is not covered by insurance policyholders can suffer huge losses if at any time the car crash or even lost.
We take the example of a Honda Jazz owner named Maya. She lives in Jakarta, which is densely packed and prone to crime and accidents. So worrying about anything happening to her new car.
Maya is calculating the cost she incurs in the event of an accident when she drives down the street. She compares the cost without insurance and with insurance.
Details of cars and events:
If without insurance, she must spend a total cost of about Rp 2.5 million. In addition to having to pay such a fee, she had to put his car for 3 days in the garage.
The result, she was not free to move because they must ride public transport.
The cost of Rp 2.5 million consists of:
- Rp 1.5 million for a dented front bumper
- Rp 1 million for blisters
The cost of it she spent for a single incident. If in a year happened for example 3 times accident with the same damage, she must spend a total of Rp 7.5 million.
By using insurance, Maya only need to spend Rp 300 thousand for all the damage. Therefore, the damage is only counted one incident. But the insurance money is just the cost of risk.
Maya still have to pay auto insurance premiums for protection for a full year. According to her research on the Internet, all risk insurance premiums vary, from 2.5% to 3.5%. She made the calculation by taking the middle rate, ie 3%.
Then the details of all Maya risk car insurance premiums are as follows:
Pure Premium: 3% x Rp 220 million = Rp 6.600.000
The money of Rp 6,600,000 was only issued once for protection for a year. If you want to claim, she only needs to pay Rp 300,00 per incident and get compensation if the car is lost.
Then she thought, Jakarta is prone to flooding. So she added the expansion of flood dependents at a cost of 0.35%.
Actually there is another expansion, ie riots and natural disasters at the same cost. But she thinks she does not need them now.
Expansion: 0.35% x Rp 220 million = Rp 770.00
Then the total cost of the insurance premium: Rp 6.600.000 + Rp 770.000 = RP 7,370,000
After paying Rp 7,370,000, already. She no longer has to worry too much if his car is lost or damaged.
When viewed at a glance, the auto insurance premium is indeed greater than the cost of repairs. However, in case of the same accident as the above case example.
Accident who can predict? Although we are careful. If other drivers are reckless, we can still be hit. And it can happen many times over the course of a year. Especially in the city traffic is always crowded. According to a WHO survey, traffic accidents are even the third largest killer in the world.
If his car has to stay anyway she can get a replacement car for a certain period of time. Usually 3 x 24 hours after the car entered the workshop.
That’s why Maya finally chose all risk car insurance. Maya assessed the cost of all auto insurance premium risk is not high if you see the amount of benefits received.