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Guide to Understanding Car Insurance in Pakistan

Guide to Understanding Car Insurance in Pakistan

Have you ever thought of insuring your car in Pakistan? To do so you need to understand a few components of car insurance Pakistan. According to the Security and Exchange Commission of Pakistan, only 2.7% of the total population owns a registered vehicle that has car insurance in Pakistan. There are several reasons for these alarming numbers and statistics, such as the fact that the government has not made it mandatory for every car to have insurance and the lack of awareness of the general public and whether you have picked the right insurance for your needs.

Types of Car Insurance

Let’s discover some different types of car insurance.

1. Collision Car insurance

As the name suggests, collision car insurance Pakistan covers the damage done to the vehicle due to a collision with an object or an accident.

2. Third-Party Liability Car insurance

The damage done to other vehicles, property, or persons by your car is covered by third-party liability car insurance Pakistan. It does not cover the damage done to your vehicle.

3. Comprehensive Car Insurance

This is the recommended car insurance in Pakistan as it covers everything. Comprehensive car insurance covers the damage done to you, your car, and any unfortunate third party that your vehicle damaged.

Coverage Details

There is a complicated layer of how car insurance Pakistan works, in what aspects it is applicable, and what damages are not covered in what sorts of events.

Let’s delve into some aspects of these coverage details:

1. Damage to own vehicle

It covers the damage done to your vehicle or the car owned by a third party in case of an accident or an unpredictable incident.

2. Third-party property damage

It pays for the damage caused to someone else, their property, or their vehicle by your car.

3. Understanding Deductibles

Insurance is not free, at least not in Pakistan, and it costs money to get your car or any other aspect of your life insured. Before you are covered by insurance, you must pay a certain amount. Deductibles vary and are dependent on what type of insurance policy you choose, what aspects of your life are covered by that package, and several other closely linked factors. You must have a sound understanding of deductibles because it is directly related to your financial condition and expenses. Knowing about deductibles will aid you in making wise decisions about your insurance.

4. Non-Claim Bonus(NCB)

A nonclaim bonus is a method by which car insurance companies reward their customers who have shown excellent records of driving and have not registered any claim for a certain period. Car insurance Pakistan companies offer discounts on premiums in the form of a non claim bonus. Non-claim bonuses are beneficial for both the insurance company, as it helps them reduce expenses on claims, and the customer, because the companies offer discounts on premiums. Another great thing about a non-claim bonus is that it is not bound to your car only, because if you decide to replace it with another vehicle, or even better if you decide to change insurers altogether, the bonus can be transferred.

Additional Coverage Options

  • Insurance companies might cover roadside assistance as well. For example, they will help if you have a flat tire, your car has broken down, or you are facing a similar emergency.
  • Insurance companies offer full coverage of replaced car parts and neglect the depreciation in their value. This is done so that you will receive the actual value of the damaged part without weighing in factors like wear and tear.
  • Another factor that insurances cover is the cost of renting a car when your own is at an auto repair shop. Insurers bear the expenses for a rental car for the time your vehicle is at the auto repairs.


Policy Review

One of the most crucial things to consider before signing up for insurance is the insurance policy. This is because car insurance Pakistanis directly related to your economic status and financial stability. To find the most suitable insurance for your car, you need to review the policies of different car insurance companies so that you can get an overall idea of what they have to offer.


Car insurance is a method to safeguard ourselves on the road. Understanding car insurance Pakistan policies, deductibles, non claim refunds, and coverage details of car insurance is important to picking the car insurance most suitable for you.

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