Car Insurance: Types, Notes on Choosing and Using

What is auto insurance?
Latest update date: February 16, 10

Car insurance is a financial contract between a car owner and an insurance company, to protect the assets and liabilities associated with the ownership and use of a car.

According to statistics from the Vietnam Insurance Association, in 2021, there were more than 7,2 million insured cars, with total insurance premium revenue reaching nearly 18.000 billion VND. This shows the importance and popularity of car insurance in modern life.

Currently, auto insurance is divided into compulsory insurance and voluntary insurance, including the following common types: Compulsory civil liability insurance, vehicle physical insurance, driver and passenger accident insurance, and extended insurance.

When deciding to buy auto insurance, you should choose reputable insurance companies and compare benefits and fees between different packages. Read the terms of the contract carefully, provide honest information, and consider additional services to ensure optimal benefits for yourself.

When using auto insurance, it is very important to comply with traffic laws, maintain the vehicle regularly and equip it with safety equipment. If an accident occurs, promptly notify the insurance company and prepare the necessary documents for compensation. Cooperate closely with the assessor to protect your rights.

Let's explore more details about auto insurance through the following article!

What is auto insurance?
Auto Insurance – A-Z Overview

Auto Insurance Overview

Car insurance is a legal contract between the car owner and the insurance company, to protect the car owner's finances and ensure the safety of traffic participants when risks occur. Car insurance is regulated by a strict legal system in Vietnam with the Law on Insurance Business and related decrees and circulars.

1. The role of auto insurance

Car insurance helps protect the property (the car) and civil liability of the car owner against risks such as accidents, natural disasters, theft, etc.

The importance of car insurance is reflected in two main aspects:

  • Financial protection for car owners: In the event of an accident or breakdown, the cost of repairing or replacing a car can be very high. Insurance helps car owners avoid these large unexpected expenses.
  • Ensuring safety for traffic participants: Compulsory civil liability insurance helps protect the rights of third parties in the event of an accident, contributing to ensuring traffic order and safety.

According to data from the Vietnam Insurance Association, in 2023, motor vehicle insurance premium revenue will reach about VND 17.500 billion, accounting for 15,8% of total non-life insurance premium revenue.

2. Legal framework for auto insurance in Vietnam

Car insurance activities in Vietnam are regulated by a strict system of legal documents, under the management and supervision of the Ministry of Finance and the Vietnam Insurance Association.

  • Law on Insurance Business No. 08/2022/QH15 is the highest legal document, stipulating the basic principles of insurance business activities.
  • Decree 03/2021/ND-CP on compulsory civil liability insurance of motor vehicle owners specifically regulates this type of compulsory insurance.
  • Other circulars and guiding documents such as Circular 04/2021/TT-BTC detailing a number of articles of Decree 03/2021/ND-CP contribute to perfecting the legal framework for auto insurance activities.

This system of documents creates a transparent legal environment and protects the interests of both insurance companies and insurance participants.

Voluntary auto insurance
Auto Insurance & What You Need to Know

What Are the Common Types of Auto Insurance?

Car insurance in Vietnam includes many types such as: Compulsory civil liability insurance, vehicle physical insurance, driver and passenger accident insurance, extended insurance.

1. Compulsory civil liability insurance

Compulsory civil liability insurance is a type of insurance that all car owners must participate in according to the law. The insurance protects the car owner's liability for personal and property damage caused to third parties.

The maximum insurance liability level according to Circular No. 04/2021/TT-BTC is 150 million VND/person/case for personal injury and 100 million VND/case for property damage.

where to buy auto insurance
What kind of car insurance is good?

2. Vehicle physical insurance

Vehicle physical damage insurance protects the owner against physical damage to his or her vehicle. There are two main types:

  • Comprehensive insurance: Covers all risks such as collision, fire, natural disasters. Compensation value = Insurance participation value x (1 – Depreciation rate). In which, the depreciation rate depends on the time of vehicle use, usually 10-20%/year.
  • Parts insurance: Insured parts include: glass, mirrors, lights, rims, tires, batteries, DVD players... Maximum compensation limit for each part, for example: front windshield 5 million VND/incident, rearview mirror 2 million VND/incident...

3. Driver and passenger accident insurance

Driver and passenger accident insurance provides financial protection for drivers and passengers in the event of an accident. Compensation is usually calculated based on the percentage of disability or death, with the maximum amount being hundreds of millions of dong.

4. Extended Insurance

In addition to the three main types of insurance mentioned above, car owners can choose to add some optional insurance types to expand the scope of protection, such as:

  • Natural disaster and flood insurance: compensation for damage caused to vehicles by natural disasters and floods.
  • Total vehicle theft insurance: compensates 100% of the vehicle value when stolen.
Compulsory car insurance
Extended auto insurance packages

Reference comparison table:

Insurance type Main characteristics Required Level
Compulsory civil liability insurance Third Party Liability Protection Obligatory
Car insurrance Vehicle physical damage protection Voluntary
Driver and passenger accident insurance Protect people in the car Voluntary
Extended insurance (theft, flood) Protection against special risks Voluntary

What to Note When Choosing to Buy Auto Insurance?

When choosing auto insurance, prioritize reputable insurance companies and compare benefits and rates between different packages. Read the insurance terms carefully, provide honest information, and consider the accompanying services to ensure the best benefits for yourself.

1. Choose a reputable insurance company

Prioritize choosing large insurance companies with brands and many years of experience in the market such as Bao Viet, Bao Minh, Pjico, MIC, PTI, Liberty, VNI, etc. These companies often have strong financial capacity, ensuring the ability to pay compensation, along with a wide network of garages and affiliated hospitals nationwide.

2. Evaluate benefits and premiums

Carefully compare the benefits and premiums of different insurance plans from different companies. Choose the insurance plan that best suits your needs and your budget. Don’t just focus on the low price and ignore the important benefits.

For example, with auto body insurance, a premium package typically has broader coverage, including theft and natural disaster risks, but the premium is also higher than the basic package.

3. Carefully read the terms and conditions of insurance

Before signing the contract, read and understand the terms and conditions of the insurance carefully. Pay attention to important contents such as:

  • Coverage: What risks are covered, what are excluded.
  • Depreciation, deductible: Depreciation rate when claiming compensation, minimum amount the vehicle owner must pay.
  • Claim procedure: Documents to prepare, processing time…

4. Provide honest information

When purchasing insurance, the vehicle owner must fully and honestly declare information about the vehicle, its condition, and its loss history (if any). If the vehicle owner intentionally misrepresents or deceives, the vehicle owner may be denied compensation or be prosecuted for insurance fraud.

5. Consider the benefits and accompanying services

Some insurance companies offer attractive benefits and accompanying services such as:

  • Optional repair garage.
  • No depreciation of spare parts.
  • Free 24/7 traffic rescue support.
  • Temporary replacement vehicle when vehicle has problem.

These benefits will bring many conveniences and peace of mind to car owners.

Notes when choosing to buy auto insurance
Things to note when choosing to buy auto insurance

What to Note When Using Auto Insurance?

When using auto insurance, car owners must comply with traffic laws, maintain their vehicles regularly, and equip them with safety equipment. In case of an accident, they must promptly notify the insurance company, prepare a complete claim file, and cooperate with the appraiser to ensure that their rights are protected.

1. Comply with road traffic laws

This is not only the responsibility of the traffic participant but also to protect insurance benefits. If there is a violation of the law such as driving under the influence of alcohol, using stimulants, carrying prohibited/overloaded goods... the insurance company has the right to refuse compensation.

2. Regular vehicle maintenance and repair

Regular maintenance is the way to keep your car in the best condition. At the same time, when an accident occurs, the car owner also needs to repair the car at a reputable garage to ensure quality and have the insurance company accept the repair costs.

3. Equip your vehicle with safety equipment

Installing dash cams, reverse sensors, anti-theft locks, etc. not only helps improve driving safety but also provides important evidence in the event of an accident, helping insurance companies easily determine the cause and liability for compensation.

4. Notify the insurance company promptly when an incident occurs.

Immediately after an accident, fire, theft, etc., the vehicle owner must contact the insurance company via the hotline or mobile application for instructions on the next steps. Do not move or repair the vehicle without consulting the insurance company.

5. Prepare complete documents and papers when requesting compensation.

To receive quick compensation, the vehicle owner needs to provide complete relevant documents and certificates such as:

  • Accident report (if any).
  • Photos of the scene and vehicle condition.
  • Invoices, documents for repairs and replacement of spare parts.
  • Vehicle registration, insurance policy…

In particular, all information provided to the insurance company must be true, and no false declarations must be made to benefit from insurance.

6. Cooperate with the insurance company during the appraisal process

When the company sends an appraiser to the scene, the vehicle owner must cooperate actively, providing full information and relevant evidence to help determine the cause and extent of damage accurately. This will help the compensation to be carried out quickly and fairly.

In addition, car owners also need to carefully keep the insurance policy and other related documents. These are important documents to prove your insurance benefits when necessary.

Questions About Types of Auto Insurance

1. Is car insurance mandatory?

Liability auto insurance is required by law. Other types of voluntary insurance are not required, depending on the needs of the vehicle owner.

2. How are car insurance premiums calculated?

Insurance premiums depend on the value of the vehicle, type of vehicle, level of risk, coverage, etc. The more expensive the vehicle, the higher the risk, the wider the coverage, the higher the insurance premium.

3. Is it safe to buy car insurance online?

Buying insurance online is an increasingly popular trend, helping to save time and money. However, car owners need to choose a reputable website with full operating license.

You should carefully review product information and contract terms before payment.

4. If I sell the car, can the insurance be transferred to the buyer?

According to current regulations in Vietnam, the compulsory civil liability insurance contract of the motor vehicle owner will terminate from the time the vehicle registration certificate is revoked. This means that you cannot transfer this type of insurance to the buyer.

For other types of voluntary insurance such as auto insurance and additional liability insurance, some insurance companies may allow contract transfer. However, the conditions and procedures for transfer will vary from company to company.

5. If I lend my car to someone else, will the insurance still be valid?

Under current regulations, compulsory motor vehicle liability insurance will protect third parties who are injured by your vehicle, regardless of who is driving. So, if the person you lend your car to causes an accident, the insurance will pay for the damage they cause to others.

For other types of voluntary insurance such as auto insurance, additional civil liability insurance, the terms of insurance will vary from company to company. Some companies may limit insurance benefits if the driver is not named in the contract.

6. How can we evaluate the professionalism of auto insurance?

To professional auto insurance options, buyers need to consider the following factors:

  • Insurance coverage: Consider whether the level of coverage meets the needs of the vehicle owner.
  • Compensation level: Assess whether the compensation amount is reasonable and adequate.
  • Convenience services: Check out the accompanying services such as free rescue and repair at authorized garages.
  • Participation benefits: Find out the benefits that insured people will receive.

7. What should I keep in mind when buying auto liability insurance?

These Pay attention when buying auto civil liability insurance including: scope of payment, level of liability, duration and validity of insurance.

8. Where to buy reputable auto insurance?

Thanh Phong Auto Cooperate with many prestigious insurance brands such as Bao Viet, Liberty, MIC – Military, Aviation – VNI,… and also provides professional insurance car repair services. Here, customers are advised to choose the type of insurance that suits their needs and financial capabilities without being forced into a specific product.

- Car Insurance: Types, Notes on Choosing and Using
Address selling reputable auto insurance, good price in HCM

Advantages of Thanh Phong Auto include:

  • Insurance premium payment guarantee.
  • Provide detailed information on each type of insurance, advise on advantages and disadvantages, rights and obligations.
  • Professional, fast and accurate insurance car repair service.
  • Replace 100% genuine components and spare parts.
  • Highly qualified team of technicians, capable of fixing any vehicle problems.
  • Support for collecting fees and looking up insurance-related information.

Contact us now for advice on buying auto insurance if needed!

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