Tips for Determining Insurance Options Based on the Age and Value of the Used Car

Liga Asuransi – Reader friends, how are you? May you, your family and your business always be in good condition. On this blog, we always discuss risk management and insurance, and this time we’ll discuss used car insurance—the importance of the right coverage for the age and value of your vehicle. If this article is useful, share it with your colleagues and find hundreds of other interesting articles on this blog!

Many used car owners think that vehicle insurance is only needed for new cars, when in reality, used cars also have high risks that need to be protected. Even though used cars are more affordable than new cars, repair costs due to accidents, theft or damage can still be very expensive.

Used cars tend to have components that are more susceptible to damage, especially if the vehicle is more than five years old. In addition, used car owners also face the same risk of accidents and theft as new car owners. Therefore, have car insurance used is a smart decision to avoid unexpected financial burdens.

However, choosing the right type of insurance for a used car can be a challenge. Is it better to use All Risk Insurance which protects against all types of damage, or is it enough to use Total Loss Only (TLO) Insurance which only covers total damage or loss of the vehicle?

In this article, we will discuss the differences between All Risk and TLO Insurance, as well as provide guidance for used car owners to choose the insurance policy that best suits the age, condition and value of the vehicle. By understanding the options available, you can protect your used car with the best protection for your needs and budget.

Differences in Coverage between All Risk and TLO Insurance

When choosing used car insurance, vehicle owners must understand the difference between All Risk Insurance and Total Loss Only (TLO) Insurance. Both offer protection against a variety of risks, but have different coverage.

For used car owners, determining the right type of insurance will help save on premium costs without sacrificing protection. The following is a complete explanation of the coverage of each type of insurance and a brief comparison.

What is All Risk Insurance?

All Risk Insurance, or what is often referred to as comprehensive insurance, provides comprehensive protection against various types of damage to vehicles.

All Risk Insurance Coverage

Covers major and minor damage, such as:

1. Dents due to minor impacts.
2. Scratches from a minor accident.
3. Damage resulting from a collision, slip, or rollover.

Protects vehicles from various risks, including:

1. Accidents that cause minor to severe damage.
2. Vehicle theft or burglary.
3. Fire due to short circuit or other external factors.
4. Damage due to riots and riots (can be added to the rider).
5. Flood or natural disaster (requires additional special rider).

Additional Flexibility (Rider):

All Risk Insurance can be added as additional protection to protect the vehicle from risks such as floods, earthquakes, riots and legal liability to third parties.

Who is Suitable to Use All Risk Insurance?

1. Owners of used cars under 5 years old that still have high resale value.
2. Car users who often drive in congested and high-risk areas.
3. Vehicle owners who want full protection against all types of damage, including even minor ones.

What is Total Loss Only (TLO) Insurance?

Total Loss Only (TLO) insurance provides protection against total damage or loss of a vehicle due to theft.

TLO Insurance Coverage

1. Covers total damage (above 75% of vehicle value).
2. Provide compensation if the car is lost due to theft or robbery.
3. Usually more cost effective in premiums than All Risk.

 Not Covered:

1. Minor damage such as dents or scratches due to minor accidents.
2. Repair costs if the vehicle can still be repaired and its value has not reached 75% of the car’s price.

Who is Suitable to Use TLO Insurance?

1. Owners of used cars over 5 years old, whose vehicle value has decreased.
2. Vehicle owners with a limited budget, but still want protection from the risk of losing their vehicle.
3. Car users who live in areas prone to theft.

Which is Better for Your Used Car?

Choose All Risk Insurance If:

1. Your used car is under 5 years old and still has high resale value.
2. You want maximum protection, including against minor damage.
3. You often drive on big city roads with high risks.

Choose TLO Insurance If:

1. Your used car is more than 5 years old and has a lower resale value.
2. You want insurance with more economical premiums but still protects against major risks such as theft.
3. You are more worried about losing your vehicle than minor damage.

Use insurance broker services such as L&G Insurance Broker to get the best recommendations according to your used car needs!

Advantages and Disadvantages of Each Type of Insurance: All Risk vs TLO

Choosing the right used car insurance is an important step to ensure your vehicle remains protected from unexpected risks. The two main options available are All Risk Insurance and Total Loss Only (TLO) Insurance.

Each type of insurance has its own advantages and disadvantages. Therefore, before deciding, it is important to understand the protection offered, the premium cost, and its suitability for the condition of your used car.

Advantages and Disadvantages of All Risk Insurance

Benefits of All Risk Insurance

1. Comprehensive Protection, Even for Minor Damage

All Risk insurance provides broad coverage, including minor damage such as scratches, dents or abrasions due to minor impacts. This is very useful for used car owners who still want to keep their vehicle’s appearance smooth.

For example: Your used car takes a hit in the parking lot, causing a small dent in the door. If you have All Risk Insurance, you can submit a claim without having to pay for repairs yourself.

2. Suitable for used cars that still have high value

If the used car you buy is under 5 years old and still has a high market price, All Risk Insurance is recommended. With comprehensive protection, you can maintain the value of your vehicle, so that the car will still have a good selling price in the future.

3. Can be added with a rider such as natural disaster protection

All Risk Insurance allows you to add additional protection (rider), such as:

1. Protection against floods and natural disasters (especially important if you live in a flood-prone area).
2. Protection against riots or riots (useful for vehicles frequently used in large cities).
3. Third party legal liability cover (if you cause damage to another vehicle).

Disadvantages of All Risk Insurance

1. Premiums Are More Expensive Than TLO

One of the main reasons why many used car owners hesitate to choose All Risk Insurance is the higher premium costs.

As an illustration, if you have a used car worth IDR 200 million, the All Risk premium fee can range from IDR 4 million to IDR 6 million per year. This is certainly a consideration, especially for those who want to save on expenses.

2. Not always profitable for cars priced under IDR 100 million

If the used car you buy is priced under IDR 100 million, paying a high All Risk premium may not be commensurate with the value of the vehicle. In cases like this, TLO insurance can be a wiser choice to protect the car from major risks without having to pay high premiums.

Advantages and Disadvantages of TLO Insurance

TLO Insurance Benefits

1. Cheaper premiums compared to All Risk

TLO insurance offers more affordable premiums than All Risk, making it suitable for used car owners who want to get financial protection without paying high fees.

For example, for a used car with a value of IDR 100 million, the TLO premium ranges from IDR 800 thousand to IDR 1.5 million per year, which is much cheaper than the All Risk premium.

2. Suitable for used cars with lower selling values

Used cars with a sales value of under IDR 100 million are more suitable for using TLO insurance, because the cost of the All Risk premium can be uneconomical compared to the value of the vehicle itself.

3. Continue to provide financial protection against major risks such as theft

If your car is lost due to theft or has an accident with damage above 75% of the vehicle’s value, TLO Insurance will compensate for the financial losses incurred. This provides very important protection, especially for vehicles that are frequently parked in locations prone to theft.

For example: If your car is stolen and not found, the insurance company will compensate the loss according to the market value of the car.

Disadvantages of TLO Insurance

1. Does not bear minor damage such as scratches or dents

Unlike All Risk Insurance, TLO Insurance does not cover minor damage. If the car experiences minor impacts or scratches due to daily use, the car owner must bear the repair costs himself.

For example: You cannot submit a claim if there is only a scratch on the car body due to being hit by a hard object on the road.

2. May Not Sufficiently Protect Cars Used Frequently in Big Cities with Heavy Traffic

If you use your car in urban areas with heavy traffic, the risk of a minor accident is higher. Unfortunately, if you only have TLO insurance, you cannot make a claim for minor damage.

For example: Your car had a minor accident in the parking lot and the body was dented. If you only have TLO Insurance, you will have to cover the repair costs yourself.

Which is Better for Your Used Car?

Choose All Risk Insurance If:

• Your used car is under 5 years old and still has high resale value.
• You want maximum protection, including from minor damage like dents and scratches.
• You often use your car in areas with heavy traffic where there is a high risk of accidents.

Choose TLO Insurance If:

• Your used car is more than 5 years old and has a selling value of under IDR 100 million.
• You want a more economical premium without losing protection against major risks.
• You are more worried about theft or total damage than minor accidents.

Use insurance broker services such as L&G Insurance Broker to get the best recommendations according to your used car needs! 

Tips for Determining Insurance Options Based on the Age and Value of the Used Car

Choosing between All Risk or TLO insurance for used cars is not just a matter of premium price, but also how much the vehicle is worth and how it will be used. If you make the wrong choice, you could pay a premium that is not commensurate with the benefits you get.

The following are several factors that can help you determine the right insurance choice based on the age, price and usage patterns of your used car.

1. Used cars under 5 years old

Used cars that are under 5 years old usually still have quite a high resale value. This value is important because the newer the car, the more expensive it will be to repair if damage occurs.

Insurance Recommendations

All Risk Insurance is recommended because:

1. It still has a high resale value, so it is important to keep the vehicle in top condition.
2. Repair costs for new cars are generally more expensive than old cars.
3. Protects from minor to major damage, including scratches and minor impacts.

Sample case:

You have a 2021 Toyota Innova, which still has a sales value of over IDR 200 million. If the car experiences a minor accident such as a dent or scratch, the repair costs can reach millions of rupiah. With All Risk Insurance, all damage is covered without having to pay out-of-pocket.

2. Used cars over 5 years old

As you get older, the selling price of a car will decrease. In this case, it is important to consider the cost of the All Risk Insurance premium compared to the value of the vehicle itself.

Insurance Recommendations

1. If the vehicle value is still high, All Risk can still be an option.
2. If the vehicle’s value has decreased quite drastically, TLO is recommended.

Comparison Examples:

The 2016 Honda CR-V still has a selling price of around IDR 180 million, so All Risk Insurance is still quite reasonable.

The 2010 Toyota Avanza, whose selling price is below IDR 90 million, is more suitable for using TLO insurance because the All Risk premium may not be commensurate with the value of the vehicle.

3. Used cars with prices under IDR 100 million

Used cars priced under IDR 100 million have experienced significant depreciation in value. In these conditions, paying All Risk Insurance premiums may no longer be economical.

Insurance Recommendations

1. TLO is more economical and suits the needs of low-priced used cars.
2. If you still want additional protection, you can add a rider for theft protection.

Sample case:

You own a 2012 Daihatsu Xenia with a market price of around IDR 85 million. The All Risk premium costs around IDR 3-5 million per year, which is almost 5% of the vehicle value. In this case, TLO insurance makes more sense, because the risk of losing the car will remain covered, while the owner can pay for small repair costs himself.

4. Used Cars Used Daily vs Occasionally

The way you use your car also determines the most appropriate type of insurance.

If the car is used every day

1. All Risk is recommended, especially if used for long trips or in areas with heavy traffic.
2. Cars that are frequently used have a higher risk of experiencing scratches, impacts or minor accidents.

Sample case:

You use your used car every day for work, driving through busy streets in Jakarta or Surabaya. With high risks on the road, All Risk will be more profitable, because it can cover minor repairs without additional costs.

If the car is rarely used or only for certain purposes

1. TLO is more recommended, because the risk of experiencing a minor accident is lower.
2. More suitable for spare vehicles or those only used occasionally.

Sample case:

You have a 2010 Suzuki Karimun Estilo which is only used for weekends or trips out of town. Because cars are rarely used and their resale value is already low, TLO insurance is more suitable, so there is no need to pay high premiums for protection that is rarely used.

5. Location and Risks of Car Use

Environmental factors are also very influential in choosing the type of used vehicle insurance.

If the car is used in a big city with a high risk of accidents

1. All Risk insurance is recommended, because minor accidents occur more often.
2. Big cities such as Jakarta, Bandung and Surabaya have heavy traffic and are more susceptible to minor collisions.

Sample case:

You live in Jakarta and use a car every day. The risk of minor impacts, light collisions, or abrasions due to narrow parking is very high. Therefore, All Risk is a better choice to avoid recurring small repair costs.

If the car is used in an area prone to theft

TLO insurance can be sufficient, especially if the risk of theft is higher than the risk of accidents.

 Sample case:

You live in an area that is prone to vehicle theft, such as an area where security is not well maintained. In this situation, TLO insurance is more important, because the risk of losing your car is greater than the risk of a minor accident.

Conclusion: Which Insurance is Most Appropriate for Your Used Car?

Choose All Risk If:

1. Your used car is under 5 years old and still has a high resale value.
2. Used daily in areas with heavy traffic.
3. You want to protect your car from minor damage like dents and scratches.

Choose TLO if:

1. Your used car is more than 5 years old and the price is under IDR 100 million.
2. The car is only used occasionally or as a backup vehicle.
3. You are more worried about the risk of theft than minor accidents.

Use insurance broker services such as L&G Insurance Broker to get the best recommendations and most competitive premiums according to your used car needs! 

The Role of Insurance Brokers in Choosing the Best Policy for Used Cars

Choosing used car insurance is not a decision that can be taken carelessly. With so many policy choices from various insurance companies, used car owners often feel confused about whether All Risk Insurance or TLO is more appropriate. This is the reason why insurance brokers have an important role in helping you get the best protection with premiums that fit your budget.

Why is an Insurance Broker Needed?

Helps compare All Risk and TLO premiums from various insurance companies

Each insurance company has different premium and coverage policies. By using the services of an insurance broker, you don’t need to bother searching and comparing yourself. The broker will analyze various offers from several companies and help you choose the best option based on price and benefits.

Provide Recommendations Based on the Age and Value of the Used Car

Not all used cars require All Risk Insurance. Cars that are older and have a low market value may be more suitable with TLO insurance to avoid high premiums that are disproportionate to the vehicle’s value. An insurance broker will provide objective advice based on the condition and age of your car, so you can get optimal protection without incurring unnecessary costs.

Ensuring Car Owners Get the Best Discounts and Promos

Many insurance companies offer special discounts and promotions, such as No Claim Bonus (NCB), discounts for loyal customers, or discounts if the vehicle has additional security systems such as a GPS tracker. Unfortunately, not all car owners are aware of this promotion. Insurance brokers will help you get the best discounts, so you can get maximum protection at a lower cost.

Conclusion 

Which is More Appropriate for Your Used Car?

Choosing the right insurance for a used car depends largely on the age, value of the vehicle and how you use it. If your car still has a high resale value and is often used in daily activities, then All Risk Insurance is the best choice because it covers minor to major damage.

However, if your car is quite old or has a value of less than IDR 100 million, then TLO insurance is more economical because it offers protection against total damage and theft without having to pay too high a premium.

Whatever you choose, make sure to not only consider the price of the premium, but also the scope of protection provided.

Why Choose L&G Insurance Broker?

1. FREE consultation to determine the appropriate type of insurance.
2. Wide network with the best insurance companies in Indonesia.
3. Professional assistance in the claims process to make it faster and easier.

Contact us now for a free consultation and get the best offer for your used car protection! 

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