How car insurance works in Pakistan: comprehensive vs third party, rates and claims

Car insurance in Pakistan comes in two kinds. Third-party cover is the legal minimum and pays for injury, death or damage you cause to others. Comprehensive cover also pays for damage to your own car and for theft, and costs about 1.25% to 2% of the car’s value a year, going by the rates PakWheels listed for 15 insurers on 8 Oct 2026.

Is car insurance mandatory in Pakistan?

Yes, third-party cover is. The national rule sits in the saved Chapter VIII of the Motor Vehicles Act 1939: section 94 requires a valid policy for any vehicle used in a public place. The Provincial Motor Vehicles Ordinance 1965 lets registration authorities suspend the registration of an uninsured vehicle.

Enforcement has been weak. An SECP (Securities and Exchange Commission of Pakistan) report found only 2.77% of about 3 crore registered vehicles insured, as of August 2023.

Sindh changed that in February 2026. Its new section 67-H says a car cannot be registered, transferred or pay annual token tax without a valid third-party policy. Motorcycles are exempt. The policy must pay victims on a no-fault basis, without going to court:

The insurer must pay within 45 days. SECP has also set up a Motor Insurance Repository, a central database that lets officials check a policy online. As of March 2026, SECP said it was working with Punjab’s transport authority to link route permits to it. We found no law like Sindh’s in other provinces yet.

What is the difference between comprehensive and third-party car insurance?

The comprehensive column comes from the standard policies of Alfalah Insurance and TPL Insurance; TPL’s also covers terrorism. EFU General sells third-party property damage as its own cover, so check whether a third-party policy includes it. Read your own policy schedule for exclusions: TPL, for example, won’t pay if a driver not named in the schedule was driving, or if the car was rented out.

For cars 7 years and older, some insurers sell a middle option. Jubilee General Takaful’s “3T” covers theft, total loss and third-party liability for cars worth under Rs 10 lakh, from 1.5% of the car’s value.

What are car insurance rates in Pakistan?

Insurers price comprehensive cover as a percentage of your car’s value (the “sum insured”). Here is what PakWheels’ comparison page showed on 8 Oct 2026:

Rates marked “from” vary by make and model. PakWheels says it may take a commission from insurers, so treat these as starting quotes and confirm with the insurer. For a full side-by-side with financial strength ratings, see car insurance companies in Pakistan compared.

To work out your own premium, multiply the car’s value by the rate. A Rs 40 lakh car at 1.5% costs Rs 60,000 a year, plus any tracker fee.

What else changes the amount I get paid?

Four things reduce a payout, and they are easy to miss when comparing quotes:

• Deductible: the part of each repair bill you agree to pay yourself. Pak-Qatar General Takaful’s claim guide defines it this way.
• Depreciation on parts: standard policies can deduct wear from the price of replaced parts. That is why TPL sells a “zero depreciation” option that pays “the full value of replaced parts”.
• Average clause: if your sum insured is below the car’s real value, own-damage claims are cut in the same proportion. Keep the sum insured close to market value at each renewal.
• Claim loading: TPL adds 10% to your renewal premium for each claim, so two claims in a year mean 20% more.

TPL doesn’t cover accessories that weren’t fitted at the factory unless you agree it with the insurer and pay extra. Pak-Qatar may reject a claim on a car with undeclared modifications, and doesn’t cover maintenance or mechanical faults.

How does takaful car insurance work?

Takaful is the Islamic form of insurance. You are a “participant” and your policy is a participant’s membership document. Pak-Qatar General Takaful, for example, publishes its Shariah waqf rules and deed on its website.

The cover itself is much the same: theft, accident damage, fire, natural disasters and third-party liability. Credit rating agency PACRA rates takaful operators on the same scale as conventional insurers, because both owe the same obligations to policyholders. Whether a product follows Shariah is for the operator’s Shariah advisers, not the rating.

How do I make a car insurance claim?

A few rules from Pak-Qatar General Takaful’s claim guide apply at most insurers:

• Never admit fault at the scene and never offer the other driver a settlement on your insurer’s behalf. Either can get your claim rejected.
• Report theft fast. Pak-Qatar asks for theft or snatching reports within 10 days, or the claim may be refused. If your car has a tracker, call the tracker company first.
• Theft claims need more paperwork: FIR, final police report, original registration book and excise file, keys, a transfer deed and a letter of subrogation, which hands your rights over the car to the insurer.

Under section 118 of the Insurance Ordinance 2000, an insurer has 90 days to pay a claim. If it is late, it owes you liquidated damages on top.

What can I do if my claim is rejected or delayed?

Complain to the insurer in writing first. Insurers such as EFU General, Habib Insurance and East West Insurance publish their complaints process on their websites.

If that fails, go to the Federal Insurance Ombudsman (FIO). Filing is free and online at fio.gov.pk, or call 1082 (9 am to 5 pm). The current Ombudsman has told his advisers to dispose of complaints within 60 days.

You can also complain to SECP, which regulates insurers, through its online complaints portal. Insurers such as Habib Insurance link to it from their motor pages.

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