Every vehicle on a Bangladeshi road must carry at least Act Liability cover. Whether you need more than that depends on one question: could you afford to replace your own vehicle tomorrow?

Act Liability — the legal minimum

Also called Third Party insurance, this covers damage you cause to other people. It does nothing for your own vehicle. The statutory limits under the Motor Vehicles Act are modest:

• Death of a third party — BDT 20,000
• Grievous injury — BDT 10,000
• Third-party property damage — BDT 50,000

The premium is a flat fee set by the tariff according to your engine capacity, and because it is a legal obligation it is never discounted.

Comprehensive — your vehicle too

A Comprehensive policy includes everything above, and adds cover for your own vehicle against accident, fire, theft, riot, earthquake, flood and storm. The own-damage part of the premium is calculated as a percentage of your vehicle's market value, which is why the figure you declare matters.

The No Claim Bonus is worth real money

Every claim-free year earns a discount on the own-damage portion of your premium:

• Private and commercial vehicles — 30% after one year, 40% after two, 50% after three
• Motorcycles — 15%, 20% and 25% respectively

Note that the bonus applies only to own damage. The Act Liability portion is statutory and stays the same.

Declare the right value

Under-declaring your vehicle's value to save premium is a false economy — claims are settled in proportion to the sum insured. Declare the honest market value and the settlement will reflect it.