Compulsory Third Party Liability Insurance FAQs


If you’re a new car owner, there may still be some questions at the back of your mind that you want answered such as the ins and outs of certain types of car insurance. Did you know that having car insurance is mandatory in the Philippines? In fact, the Land Transportation Office requires you to have a Compulsory Third Party Liability insurance policy before you start to drive your car.

To help you understand what this type of insurance covers, here are some of the most common questions about Compulsory Third Party Liability Insurance and the answers.

## Is Compulsory Third Party Liability insurance mandatory?

All car owners in the Philippines have a knowledge on the necessity of having a car insurance. Here is an excerpt from Section 389, Chapter VI of the Insurance Code of the Philippines:

“The Land Transportation Office shall not allow the registration or renewal of registration of any motor vehicle without first requiring from the land transportation operator or motor vehicle owner concerned the presentation and filing of a substantiating documentation in a form approved by the Commissioner evidencing that the policy of insurance or guaranty in cash or surety bond required by this chapter is in effect.”

As stated above, before one can register their vehicle, or renew the registration of their vehicle with the Land Transportation Office, having car insurance is mandatory. In the Philippines, the most basic type of car insurance that you can have is called Compulsory Third Party Liability insurance or CTPL. This covers the bare minimum requirements set upon by law.

## Who are the third party persons?

As the name suggests, Compulsory Third Party Liability insurance only covers third party persons involved in the accident. But who exactly are these third party persons? To clarify, here’s a quote from the Paragraph (c) of Section 386, Chapter VI of the Insurance Code of the Philippines:

“A third party is any person other than a passenger as defined in this section and shall also exclude a member of the household, or a member of the family within the second degree of consanguinity or affinity, of a motor vehicle owner or land transportation operator, as likewise defined herein, or his employee in respect of death, bodily injury, or damage to property arising out of and in the course of employment.”

Additionally, a passenger is also defined by the Insurance Code of the Philippines as:

“Passenger is any fare paying person being transported and conveyed in and by a motor vehicle for transportation of passengers for compensation, including persons expressly authorized by law or by the vehicle’s operator or his agents to ride without fare.”

To make it simple, anyone outside your car, for example, any unsuspecting pedestrians who are caught in the accident, are covered by the Compulsory Third Party Liability Insurance. On the other hand, for those riding with you who aren’t your employees or a family member within the second-degree consanguinity or affinity are also considered third party persons so they are covered by the insurance. These includes your friends who may be with you in the car.

## What does Compulsory Third Party Liability insurance cover?

So what does Compulsory Third Party Insurance exactly cover? If the car accident is proven to be your fault, this insurance will give you protection from liabilities arising from the accident. Upon the death or bodily injury of third party victims, the insurance shall only cover up to P100,000 for the funeral or medical expenses that you’re liable to pay. Any amount exceeding that will be coming from you.

## Does Compulsory Third Party Liability insurance cover personal injuries and damage to the insured car?

No, it does not. As the name suggests, only the expenses of the third party victims are covered by the Compulsory Third Party Liability car insurance. This does not include expenses for personal injuries, damage to the insured car, or damages to the property of any third party.

For instance, if you, or any of your relatives or employees get injured during an accident, you will not be covered. If your vehicle sustains damages, or if there is any property damage from the third party, the repair expenses will be coming straight out of your own pocket.

## Why is Compulsory Third Party Liability insurance mandatory?

Compulsory Third Party Liability car insurance is not only needed for the insured individual’s protection from certain liabilities. Since Compulsory Third Party Liability covers third party victims, those who don’t have any fault in the accident won’t be left without any financial help.

Imagine cars which are not insured running rampant on the streets. They can get away with anything because they know they won’t be held liable if they injure an unfortunate individual as long as they don’t get caught. In other words, this also protects the public.

## Is Compulsory Third Party Liability coverage enough?

This depends on your needs. If you’re fine with the coverage of the Compulsory Third Party Liability stated above, you can still drive with it since it still has the minimum requirements set by law. On the other hand, you can choose to get an additional type of car insurance instead, called Comprehensive Car insurance. This type of insurance policy offers a wider range of coverage that can protect you from all sorts of risks, although the coverage does depend on the insurance providers.

Commonly, some of the coverages, on top of the coverage of the Compulsory Third Party Liability, can include property damages, personal accidents, accidental collisions, fire and explosions, theft or malicious acts by third parties, as well as Acts of Nature.

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