Car Insurance in Ethiopia
Car insurance in Ethiopia, also known as vehicle insurance in Ethiopia, motor insurance in Ethiopia or auto insurance in Ethiopia, is insurance for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise from incidents in a vehicle. Vehicle insurance may additionally offer financial protection against theft of the vehicle.
Ethiopian Insurance Corporation provides car insurance protecting the insured against financial loss in the event that the motor vehicle is involved in an accident, burnt or stolen. It also covers third party liabilities.
There are three types of car insurance policies in Ethiopia that can be issued to motor owners:
a) Third Party
This type of policy covers third party bodily injury and property damage arising out of use of motor vehicle.
b) Third party Fire & Theft cover
In addition to the cover in (a) above, the policy extends to cover theft and fire. It is more expensive than Third party.
c) Comprehensive cover
It covers third party liability and property damage to the vehicle i.e.damage arising out of fire, theft and accidental damage to the vehicle.
Comprehensive doesn’t mean that it covers all risks. There are exclusions.
Under motor insurance we give cover to private cars, commercial cars, vehicles used for general cartage, tankers, school buses, tour vehicles, tractors, Motor trade, Motor contingent liability, Motor cycles, etc.
Compulsory 3rd Party Insurance
In Ethiopia, it is compulsory to have vehicle insurance before using or keeping a motor vehicle on public roads. Proclamation No 799/2013 provides for a Compulsory Third Party Insurance coverage which covers the third party with the repairing cost of the vehicle, any property damage or medication expenses which are encountered as a result of an accident by the insured. Ethipian Insurance Corporation offers Compulsory Third Party Insurance coverage.
In Ethiopia an excess payment, also known as a deductible, is a fixed contribution that must be paid each time a car is repaired with the charges billed to an auto insurance policy. Normally this payment is made directly to the accident repair “garage” when the owner collects the car. If one’s car is declared to be a “write off” (or “totaled”), then the insurance company will deduct the excess agreed on the policy from the settlement payment it makes to the owner.
If the accident was the other driver’s fault, and this fault is accepted by the third party’s insurer, then the vehicle owner may be able to reclaim the excess payment from the other person’s insurance company.
A compulsory excess is the minimum excess payment Ethiopian Insurance Company will accept on the insurance policy. Minimum excesses vary according to the personal details, driving record and the insurance company. For example, young or inexperienced drivers and types of incident can incur additional compulsory excess charges.
To reduce the insurance premium, the insured party may offer to pay a higher excess (deductible) than the compulsory excess demanded by Ethiopian Insurance Company. The voluntary excess is the extra amount, over and above the compulsory excess, that is agreed to be paid in the event of a claim on the policy. As a bigger excess reduces the financial risk carried by the insurer, the insurer is able to offer a significantly lower premium.
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