Motorised modes of transport, such as cars, buses and motorcycles, are a daily necessity for most residents in a busy metropolis like Dhaka.

With the world ever-changing, motor vehicles are now preferred over manual modes of transport such as rickshaws even for small distances.

In short, motor vehicles are an integral part of urban life and with the rising number of cars, buses and bikes on the road, the risk of accidents is increasing as well.

This means that the owners, operators or passengers of such services run the risk of physical injury, loss of property and life.

This is where insurance can come in to mitigate the risk of such losses.

Car insurance is necessary in Bangladesh mainly for two reasons, according to Shubasish Barua, executive vice president of the Green Delta Insurance Company.

"As an insurance practitioner, I can say that both life and property have financial value and insurance provides support against losses," he said.

Insuring one's car is especially important when the vehicle is purchased through bank loans.

Besides, there are also insurance facilities required to support people with injuries or in case of death," Barua added.

Insurance companies mainly provide two types of coverage: comprehensive, or first-party policy, and third-party insurance.

Earlier, third party insurance, which aimed at providing support to people such as passengers or pedestrians other than vehicle owners and drivers, was mandatory but at this moment it is not mandatory as per the new regulatory act.

Now, only comprehensive insurance is optional.

Under a first-party policy, an insurance company pays the owner if a car is involved in an accident. Compensation is also available for car theft, fire or natural damage caused by outside forces such as flooding, cyclone.

Insurers said premiums vary depending on the types of cars, value, seat capacity and their models.

If someone wants to insure an older car, the amount of premium usually becomes higher. If someone buys a new car with a bank loan, they have to take comprehensive insurance.

Through the insurance, the insurer shares the liabilities of the vehicle owner, said Ramzanul Quadar Billah, vice president of Reliance Insurance, which offers three types of vehicle insurance.

Shamima Nasrin, senior assistant vice president of Prime Insurance Company, said the premium of car insurance is the amount one pays to the insurance company on a regular basis often once a year in exchange for coverage.

"Once you've paid your premium, your insurer will pay for coverage detailed in the insurance policy, like liability and collision coverage," she added.

Those insured can claim their stake for damage from the insurer if the amount of damage exceeds Tk 5,000. In this case, the insurer will send a surveyor to assess the damage on the spot. After assessing it, the claim will be settled within one to two weeks if valid.