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Understanding Car Insurance Terms

Understanding Car Insurance Terms

In addition to preparing for possible unexpected events, you need to provide comprehensive protection for things that are important in life, one of which is the vehicle. Although it is now considered one of the financial needs, there are still many people who take it without really understanding the terms used in car insurance. Before deciding to register, know the terms that are often contained in car insurance clauses:

1. Insured Price

The purchase value of a motor vehicle when a vehicle insurance policy is made. This price is listed in the insurance policy and is the maximum size of the insurer in the event of a claim from the customer.

2. Market price

The selling value of the vehicle that is the object of guarantee.

3. Premium

The value of the money that the customer pays to the insurance in exchange for the guarantee services provided. The payment can be made monthly, yearly, or in advance cash. The value of the premium is beyond administrative costs and stamp duty.

4. Total Loss Only (TLO)

The insurance company will cover losses if the vehicle has an accident with damage repair costs above 75%, the vehicle burns, is lost due to stolen or forced seizures. However, if your vehicle only suffers minor damage such as a beret on the car body, a broken rearview mirror, or other minor damage, then the owner cannot claim insurance.

5. All Risk

This insurance is also called comprehensive or overall insurance. Unlike TLO, insurance will pay claims for all types of damage, ranging from minor damage such as abrasions, heavy damage, to loss. But All Risk insurance premiums are more expensive than TLO.

6. Loading fee

Is the cost of increasing car insurance premiums determined based on the age of the car. The calculation of loading fee is determined based on OJK rates with the following details:

  • For All Risk vehicle insurance, vehicles with an age of more than 5 years will be charged a loading fee of a minimum of 5% per year.

  • For TLO vehicle insurance, the age of the vehicle to be charged a loading fee is usually determined according to the applicable insurance company (can be above 5, 10, or 15 years old) with a loading fee of a minimum of 5% per year.

7. Indemnity or amount of indemnity

The amount of reimbursement provided by the insurer to the customer for the losses he suffered is based on the current market price. This amount of reimbursement can be reduced at your own risk as stated on the policy.

8. Deductible or at your own risk

The value that is the customer's burden on each loss or damage is calculated from the amount of compensation.

9. Endorsements

Insurance agreement issued by the second party (customer) with the consent of the first party (insurance) to change the insurance policy.

10. SPPA (Insurance Closing Request Letter)

A fill-in form filled out by prospective customers to be used by insurance to evaluate risks. This form contains a list of questions for prospective customer data, details of objects that will be insured before being approved by the insurance company.

11. Third Party Legal Liability (TJH III)

It is a guarantee of reimbursement to a third party due to a third party vehicle experiencing problems by the customer's vehicle.

12. Clause 41B (Riot Strike Malcious Damage and Civil Commition)

Providing compensation to customers when they become victims of riots, terrorism, riots, and so on.

13. Natural disasters (Act of God)

Guarantee of replacement of customer vehicles in the event of risks arising from natural disasters such as storms, earthquakes, floods, and so on.

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