Those Who Want To Buy A Car For Free Taxes, First Look At Total Loss Only (TLO) Insurance And All Risk

Car repair illustration. (Photo: By courtesy)

JAKARTA - The high number of car sales in the March period also raised the demand for vehicle insurance, which usually accompanies every unit handover. For consumers, what needs to be considered is how to choose vehicle insurance that fits each individual character.

In general, car insurance is divided into two categories, namely total loss only (TLO) and all risk (comprehensive). The following is a brief description of the two types of vehicle insurance.

1. Total loss only (TLO)

Total loss only insurance is vehicle insurance where claims can only be filed in the event of a total loss, aka theft. In addition, this category of insurance also covers damages if the repair costs are estimated to be equal to or exceed 75 percent of the price of the vehicle immediately before the loss.

This means that if the damage suffered does not reach the value of 75 percent, the owner of the vehicle cannot get compensation.

So, why does it have to be 75 percent? This assumption is taken with the consideration that the car that was damaged is certainly no longer usable. Meanwhile, the advantage of TLO compared to all risks is a lower premium deposit.

However, what is of note from the total loss only insurance system is that new claims can be made when the car is badly damaged, and this means that the number of possibilities is less.

2. All risk

Literally, this type of insurance is all risk if interpreted to mean the overall risk. From the embedding of this meaning, it can be seen that the protection offered by this facility means bearing claims for all types of damage, ranging from minor damage to major damage to loss.

If the TLO requires 75 percent damage, then the all risk consumer only needs a few scratches or other minor damage to be able to get replacement. Later, the insurance company will pay a fee commensurate with the repairs made by the repair shop.

The advantage of all risk is, of course, the breadth of claims submitted. However, keep in mind, to enjoy this type of insurance service consumers have to spend more.

During its development, vehicle insurance has now offered many product features and facilities that are more varied with the times. For example, third party liability schemes, riot insurance, riot, terrorism and sabotage, and natural disaster insurance.

So, in the midst of a flood of discounts for purchasing a new car due to the elimination of Sales Tax on Luxury Goods (PPnBM), prospective buyers need to first understand the type of insurance that will be selected according to their respective characteristics.