All Risk Car Insurance Extensions: Are They Worth It?
All risk car insurance and Total Loss Only (TLO) both offer extra coverage for floods, earthquakes and riots. Here is how premiums compare in Indonesia.
Vehicle insurance, or motor vehicle protection, comes in two main types: all risk car insurance and Total Loss Only (TLO). Each has its own strengths and weaknesses in terms of coverage and the premiums you pay.
All risk insurance covers loss from theft and all types of damage, whether minor or severe. TLO insurance also covers loss from theft, but it only pays for repairs when the damage costs more than 75 percent of the vehicle's value.
So how much should you pay each year for all risk and Total Loss Only (TLO) insurance?
The premium usually depends on the vehicle's price and age. The percentage rate also varies by region. For example, Jakarta falls under Zone 2. According to a circular letter from the Financial Services Authority (OJK), Indonesia's financial regulator, the premium rate there is 2.08% to 2.29% for all risk and 0.38% to 0.42% for TLO.
In addition to these standard rates, insurers often offer extra premium percentages for extended coverage. So what do extensions actually mean?
A car insurance extension covers losses from events outside the risks listed above. These include losses from natural disasters such as earthquakes, floods and tsunamis, as well as all forms of riots, demonstrations or terrorism.
Adding an extension is important for both all risk and TLO policies. With it, coverage is not limited to loss or damage to the car. It covers a wider range of risks, especially in a country prone to natural disasters like Indonesia.
Premiums for these extensions also vary by region. In Jakarta (Zone 2), the extension premium is 0.10% to 0.125% for all risk and 0.075% to 0.1% for TLO.
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