Understanding Car Insurance, Types, And How To Calculate The Cost

Illustration. (Photo: Doc. Antara)

JAKARTA - Having a car certainly needs to provide protection, one of which is by providing car insurance.

As is known, the cost of repairing a damaged car is very high. Therefore, it is very important to have vehicle insurance. Insurance protects customers from the risk of losing too much money.

But before buying car insurance and knowing the cost of car insurance that must be issued, consider the information below first.

Understanding Car Insurance

Car insurance is basically insurance that provides compensation if the car is damaged, whether severe or minor. Damage covered by insurance varies from company to company.

However, most bear the risk of damage from natural disasters, accidents, riots, and theft.

Through the ownership of special car insurance, a car owner can rest easy because when the car is damaged, the costs will be borne by the insurance company. Of course, with a note that the damage experienced is included in the risk that is borne.

The details are listed in the policy, therefore it is necessary to carefully choose vehicle insurance so that the protection benefits are maximized.

Types of Car Insurance

The next understanding of special car insurance is the types, which are quite diverse.

So that you are no longer confused and get the benefits according to your wishes and needs, it is mandatory to know all types of special car insurance.

Here are some types of car insurance that you must know:

1. TLO Car Insurance

The first type is TLO insurance which provides protection from serious damage and theft. So, new customers can file a claim if the car is badly damaged and cannot be used at all. Or with the condition of the car being stolen by someone.

2. All-risk car insurance

The second type is all-risk insurance which covers all types of risks on the car. Both damage due to accidents (from light to heavy damage), riots, natural disasters (flooded), and stolen by people.

3. Combined Car Insurance

Next is combined car insurance, which is a combination of TLO and all-risk. Usually for a newly purchased car, where in the first year you get all-risk insurance and in the following year only TLO.

4. Expansion of Car Insurance

The last is expansion vehicle insurance, meaning that the benefits of TLO and all-risk are further expanded by customers. For example, it was extended to get damage protection from hurricane disasters.

How to Calculate Car Insurance Cost

After knowing all the types of car insurance, the next step is to understand how to calculate the cost of car insurance. The fee here is called the premium that the customer must pay every month. Premiums must be paid regularly so that the benefits of protection from insurance can be obtained when risks occur at any time.

The amount of the premium must be known because it will determine whether or not you can pay this premium regularly. So car owners need to do calculations to then choose insurance whose premiums fit in their pockets.

The following are the details of the principle of calculating the premium:

1. Calculation of All-risk Insurance Fees

The premium value for vehicle insurance has been determined by the Financial Services Authority (OJK) and is national in nature.

Especially for All Risk insurance premiums usually have a greater value than TLO because the protection is more complex. The premium value from OJK for all-risk insurance ranges from 1.05 to 4.2 percent

The amount of car insurance premiums is influenced by a number of factors, starting from the price of the car, then the category of the car, then the domicile of the car owner.

So different areas, different types of vehicles, of course, different premium values. The details will be explained by the insurance company.

2. Calculation of TLO Insurance Costs

Meanwhile, the calculation of the cost of TLO insurance premiums tends to be smaller because of the limited benefits. Just like all-risk, TLO premium fees are also determined by the OJK.

So, for example, a customer has a car worth Rp 250 million and is in category 3 with an insurance rate ranging from 0.38 to 0.42 percent. Then the 0.38 percent rate can be taken, the calculation becomes:

IDR 250 million x 0.38 percent = IDR 950,000 per year.

From this calculation, customers only need to pay a premium of Rp. 79 thousand per month.

Through the explanation above, of course, you can understand more about car insurance. Both for the benefits that can be obtained to the amount of premium costs that are borne and must be paid regularly.

In the future, car insurance customers will have no difficulty choosing insurance according to their needs and financial conditions.