Differences Between TLO, All Risk, and Third Party Liability Insurance

Owning a motor vehicle certainly requires adequate protection. Car insurance is a smart choice to protect your investment from various risks. However, with the variety of insurance types available, choosing the right policy can be a challenge. In this article, we will discuss in detail the differences between the three main types of car insurance: TLO (Total Loss Only), all-risk, and third-party liability. Let's explore together to help you make the right decision based on your needs and budget.

What is TLO (Total Loss Only) Insurance?

TLO insurance is a type of coverage that only provides protection when the vehicle suffers total damage or is lost. Total damage is usually defined as damage where the repair costs reach 75% or more of the vehicle's value.

Benefits and Coverage of TLO

• Protection against total damage due to accidents

• Protection against vehicle theft

Advantages and Disadvantages of TLO

• Advantages: Cheaper premiums compared to all-risk insurance.

• Disadvantages: Does not cover minor or partial damage. If your vehicle suffers minor or moderate damage that does not reach the 75% threshold of the vehicle's value, you cannot file a claim. This means repair costs for minor damage such as scratches, dents, or minor flood damage must be borne by you.

Ideal Situations for TLO Insurance

• Owning a car over 5 years old

• Vehicles with not too high a market value

• Drivers who are confident of their driving skills and rarely involved in minor accidents

What is All-Risk Insurance?

All-risk insurance provides comprehensive coverage against all types of damage or loss, whether minor, major, or total loss.

Benefits and Coverage of All-Risk

• Protection against all types of damage (major and minor)

• Protection against vehicle loss

• Damage from collisions, both minor and major

• Theft

• Fire

• Natural disasters such as floods, earthquakes, or typhoons

• Damage due to riots or civil disturbances

Advantages and Disadvantages of All-Risk

• Advantages: Broader coverage, providing peace of mind.

• Disadvantages: More expensive premiums compared to TLO.

Ideal Situations for All-Risk Insurance

• Owners of new or luxury vehicles

• Those living or frequently driving in disaster-prone or high-crime areas

• Drivers seeking maximum protection without worrying about repair costs

What is Third Party Liability Insurance?

Third party liability insurance, provides protection against losses or damages experienced by third parties due to an accident involving the insured vehicle.

Benefits and Coverage of Third Party Liability

• Protection against third party losses due to accidents

• Covers legal fees and compensation to third parties

• Medical expenses or death benefits for accident victims

• Repair costs for third-party property damaged due to the accident

Advantages and Disadvantages of Third Party Liability

• Advantages: Protects against third-party legal claims.

• Disadvantages: Does not cover damage to the insured vehicle.

Note: Third party liability insurance will be required for all vehicle owners in Indonesia starting January 2025.

Comparison Between TLO, All-Risk, and Third Party Liability

1. Coverage and Benefits

   • TLO: Covers total damage and vehicle loss.

   • All-Risk: Covers all types of damage and vehicle loss.

   • Third Party Liability: Covers losses or damages experienced by third parties.
     
     

2. Premium Costs

   • TLO: Cheaper premiums compared to All-Risk.

   • All-Risk: More expensive premiums but broader coverage.

   • Third Party Liability: Generally lower premiums due to limited coverage.
     

3. Ideal Situations for Each Type of Insurance

   • TLO: Suitable for older vehicles or vehicles with a high risk of loss.

   • All-Risk: Suitable for new vehicles or vehicles of high value.

   • Third Party Liability: Suitable for vehicle owners who frequently drive in crowded areas.

Factors to Consider When Choosing Vehicle Insurance

• Value and Age of the Vehicle: For new or high-value cars, All-Risk might be the best choice. For older cars, TLO may be more economical.
  
  

• Budget: Consider your financial ability to pay premiums. Avoid choosing insurance that burdens your finances.
  
  

• Frequency of Use: If you frequently use your vehicle, especially in densely populated or accident-prone areas, All-Risk can provide better protection.
  
  

• Environmental Risks: Consider the risks in the area where you live or frequently drive, such as flood or theft risks.
  
  

• Driving Skills: If you are confident in your driving skills and rarely experience minor accidents, TLO may be sufficient.

Common Mistakes in Choosing Vehicle Insurance

Many vehicle owners choose insurance without thoroughly considering their protection needs. Selecting insurance based solely on the cheapest premium can result in inadequate coverage in the event of damage or loss. Not reading or understanding the policy terms can lead to claims being denied when needed.

Tips for Choosing the Right Vehicle Insurance

• Compare several offers from different insurance companies to find the best one. Reading customer reviews can provide insights into others' experiences with the insurance company.

• Consulting with an insurance agent can help you understand the insurance products offered and tailor them to your needs.

Recommendations Based on Vehicle Type and Needs

• Choose insurance that matches the condition of your vehicle and your protection needs. New vehicles may need All-Risk, while older vehicles may opt for TLO. Below is the recap of the definitions.
  

• TLO: Limited coverage for total damage and loss.

• All-Risk: Comprehensive coverage for all types of damage and loss.

• Third Party Liability: Protects against third-party losses or damages.

Conclusion
Choosing the right car insurance is a crucial step in protecting your investment. By understanding the differences between TLO, All-Risk, and Third Party Liability insurance, you can make a more informed decision based on your needs and situation.

Remember that third-party liability insurance will be legally required in Indonesia starting January 2025, while the choice between TLO and All-Risk depends on factors such as the vehicle's value, budget, and the level of risk you face. At Oona Insurance, we understand that every vehicle owner has different needs. That's why we offer a range of customizable car insurance options to suit your needs.

Advantages of car insurance from Oona Insurance include:

• Fast and easy claims process

• Extensive network of partner workshops

• 24/7 customer service

• Additional options such as flood protection or passenger insurance

With Oona Insurance, you not only get an insurance policy but also peace of mind and assurance that your vehicle is well protected.

FAQ

• What is TLO (Total Loss Only) insurance? TLO insurance provides coverage if your vehicle suffers total damage or is lost. Total damage is defined as damage where the repair costs reach 75% or more of the vehicle's value.

• What does All-Risk insurance cover? All-Risk insurance covers all types of damage to your vehicle, whether minor or major, as well as vehicle loss due to theft, fire, natural disasters, and damage caused by riots or civil disturbances.

• Why do I need third-party liability insurance (TPL)? TPL insurance protects you from claims made by third parties due to accidents or damage you cause. It will be mandatory in Indonesia starting January 2025 and is essential to avoid severe financial consequences.

• How to choose between TLO and All-Risk? Choose TLO if your vehicle is old or has a low market value and you want more affordable premiums. Choose All-Risk if you have a new or high-value vehicle and want comprehensive protection.

• Is All-Risk insurance more expensive than TLO? Yes, All-Risk insurance premiums are usually higher than TLO due to its broader coverage, which includes all types of damage and vehicle loss.

• Is third-party liability insurance (TPL) mandatory in Indonesia? Yes, starting January 2025, third-party liability insurance will be required for all vehicle owners in Indonesia.

• What should I do if my insurance claim is denied? Check the reasons for the denial, complete the missing documents, and resubmit the claim if possible. If necessary, consult an expert or lawyer.

• How is the vehicle insurance premium calculated? Insurance premiums are calculated based on several factors such as the vehicle's value, age, type of coverage, and the driver's risk profile.

• Does TLO insurance cover minor damage? No, TLO insurance only covers total damage or vehicle loss. Minor or partial damage is not covered by the TLO policy.

• Does All-Risk insurance cover damage from natural disasters? Yes, All-Risk insurance covers damage from natural disasters such as floods, earthquakes, or typhoons, as well as damage caused by riots or civil disturbances.