Understanding Car Insurance in Bangladesh: What to Know Before You Buy
Insurance is an effective way to obtain financial protection against unexpected risks. The number of vehicles in Bangladesh is constantly increasing, and so are road accidents. Buying a car is a significant investment, so if there is an accident, the financial loss can be substantial. Therefore, it is necessary to have car insurance. Various damages, including accidents, theft, and natural disasters, are covered by insurance. An insurance policy will provide you with financial protection and protect you from legal complications at the same time.
Car insurance is widely required for legal and financial protection in Bangladesh. However, most car owners lack a clear understanding of insurance policy selection, coverage limits, how premium rates are determined, and various terms and conditions. This blog provides an idea about car insurance in Bangladesh. What you need to know before buying insurance is also discussed in detail.
Things to consider before buying car insurance
The premium depends on the type of car, engine CC, Full Insured Value (FIV), add-ons, driving record, the environment in which you regularly drive, the driver's age, the driver's experience, etc.
1. Types of car insurance
In Bangladesh, there are two main types of car insurance: third-party liability insurance and comprehensive insurance. Third-party liability insurance is the minimum and mandatory insurance for cars. It covers damages to third parties, i.e., other people or property, such as property damage, death, and serious injury. In a word, it does not cover damage to your car, but protects against claims if there is any damage to others due to you. This policy is suitable for those who want legal protection at a low cost.
Comprehensive insurance is the most popular and effective. It covers damage to your own car and to the other party's car. This insurance policy provides direct protection to the insured in the event of damage to the vehicle caused by accidents, theft, fire, explosion, natural disasters, or vandalism.
2. What will be covered in the insurance policy
Insurance covers accidental damage, accidental fire, theft, theft of vehicle parts, damage due to violent acts, damage due to floods, injuries in accidents, etc. Conditions apply to all these issues. Therefore, the insurance policy and add-ons should be read carefully.
3. What is not covered by car insurance
The insurance does not cover any damage to the car due to mechanical or electrical problems. Problems with the engine, tires, battery, etc., are not covered by insurance. The car company or showroom provides a warranty to resolve these problems. Car insurance will not cover any damage caused by drunk driving, reckless speeding, driving without a valid license, damage due to carelessness, etc. If the car is damaged due to overload, it will not be covered by the insurance.
4. Reasons why an insurance company may cancel a claim
If a car is used for personal use, a taxi, or in a service, it will not be covered by the insurance. In addition, if intentional damage or incorrect information is proven, the insurance company will not be obliged to pay compensation. In a car accident, if the driver does not have a driver's license or is under the influence of alcohol, the company may cancel the claim. If the car is seized for drugs or other illegal activity and suffers damage as a result, the insurance company may cancel the claim.
5. How to claim compensation
Inform the insurance company immediately in case of any accident or loss. File a GD at the nearest police station and submit a copy to the insurance company. The insurance company will inspect the car and assess the damage. After checking, the vehicle will be sent to a specific garage approved by the insurance company. The insurance company will pay the particular bill under your policy or offer a cashless claim.
Things to check before getting insurance
-The premium depends on the car’s current market value. If you are buying an old or used car, don't underprice it to pay a lower premium. Because if an accident occurs, you will also get less compensation.
-Some additional things can be added to a specific insurance policy. This is called an add-on cover. For example, flood, earthquake, etc. Choose the add-on cover based onthe natural disaster risk in the area where you live.
-Compare the policies of different companies. Check the company's claim settlement ratio. Check the depreciation measurement policy.
-Check if the insurance policy has a cashless garage facility. As a result, if the car is serviced or repaired at a garage listed by the insurance company, the insurance will cover the expenses. Or you will get a special discount.
-Check whether the insurance policy offers a no-claim bonus. Under this facility, if you do not make any claim for an accident for a specific period, you will get a discount on the next premium.
-Before purchasing an insurance policy, you must have your vehicle registration certificate, tax token, fitness certificate, National Identity Card (NID), and driving license.
Final Thought
Insurance is mandatory for all types of motor vehicles in Bangladesh. Cars must have a minimum third-party liability insurance. Driving without insurance will result in legal complications, including fines. Choose the right insurance policy not only for legal obligations, but also to reduce safety and financial risks. Many people get confused while buying insurance or insurance policies. Understand the policy terms and conditions, as well as the claims process, thoroughly. Choose the policy that best suits your needs and convenience.
Frequently Asked Questions
1. Is car insurance mandatory in Bangladesh?
Insurance is mandatory for all types of motor vehicles, including cars, in Bangladesh. Driving without insurance will result in a fine.
2. What does comprehensive insurance cover?
This insurance policy covers damage to your own car, theft, fire, natural disasters, etc., as well as any damage to the other party.
3. What factors do car insurance premiums depend on?
The premium depends on factors such as the type of vehicle, engine CC, Full Insured Value (FIV), add-ons, driving record, the environment in which you regularly drive, the driver's age, and the driver's experience, among others.
4. What is No Claim Bonus?
Under this facility, if you do not make any claim for an accident for a specific period of time, then you will get a discount on the next premium. This special discount is called No Claim Bonus.
5. What are the documents required to buy car insurance?
Before purchasing an insurance policy, you must have your vehicle registration certificate, tax token, fitness certificate, National Identity Card (NID), and driving license.
