Difference between basic car insurance and add-ons: Insights for Filipino drivers

Unexpected road accidents, natural disasters, sudden collisions - all add up to a car owner's financial liability, and the only solution to such issues is car insurance. However, for insurance to work, you must choose an effective plan. Now, for most Filipinos, the confusion starts here, as the car insurance universe includes terms like basic coverage, CTPL, comprehensive, and add-ons. And you must understand each of these terms and their differences to get optimal car protection, financial security, and peace of mind.

Why is car insurance essential? It is a common question among car owners, and we’d like to let you know that while CTPL insurance is a legal requirement, the other add-ons enhance your safety package.

Furthermore, with so many vehicles, traffic jams, busy roads, and poor driving, accidents and collisions are more likely. Add to this the high frequency of natural calamities like floods and typhoons, all of which make sense in opting for optional car insurance.

It is here that you need to understand the difference between basic and add-on car insurance, as knowing these terms helps Filipino drivers select the right coverage to protect their vehicle and finances effectively.

So, without any delay, let’s get started -

Basic car insurance & add-ons: Understanding the key differences

Car owners usually believe that basic car insurance is enough; however, in reality, it is not. Why? Because of the limited protection you get. Comes in optional coverage, such as comprehensive and add-ons that fill gaps, providing wide coverage and peace of mind during emergencies.

Basic car insurance coverage

When we say basic car insurance, it mainly concerns CTPL, i.e., Compulsory Third Party Liability and basic comprehensive insurance. While CTPL is required by law, the basic comprehensive coverage offered varies by insurance provider.

Here are the common inclusions a basic insurance covers -

• Damage caused to third-party
• Basic accident-related damage
• Other limited protection (depending on the provider)

Note, basic insurance offers limited coverage. Damages caused by floods, theft, or vandalism are not included.

Add-ons insurance coverage

Add-ons are optional benefits that increase the depth of your insurance plan. This coverage optimises your policy by offering coverage against the following -

• Natural disasters
• Personal accident coverage
• Roadside assistance
• Passenger protection
• Loss of Use
• Total Loss
• Acts of Nature

Remember, add-ons are meant to customise your insurance package, making it more reliable and better suited to local road and weather conditions, so you can feel more secure on every trip.

Also Read: Car insurance add-ons in the Philippines: Which ones are worth it?

Types of basic car insurance & add-on coverages

Starting with the basic coverage, it comprises CTPL and comprehensive coverage. Let us discuss each in detail -

CTPL insurance: Compulsory Third Party Liability insurance is the minimum requirement under Philippine law for all motor vehicles. It covers third-party injury or death - no protection for the driver, passengers, or the insured vehicle.

Comprehensive insurance: This plan is optional but highly recommended, as it provides enhanced protection for your car against theft, accidents, fire, and collision damage. Still, it does not automatically include coverage for special events like floods, riots, or other events unless added at the owner’s request.

When it comes to car insurance add-ons, here are some popular options commonly chosen by Filipino car owners, given traffic and weather conditions.

Acts of God: This coverage protects against natural disasters that occur in the country from time to time, such as typhoons, earthquakes, and landslides.

Loss of Use: This one offers an allowance or rental reimbursement while the insured vehicle is under repair.

Personal accident: This coverage covers medical and hospital bills, as well as compensation for death and disability.

Roadside assistance: This one offers facilities like towing, emergency fuel delivery, flat tyre change, and minor repair.

Also Read: Impact of safety features on car insurance premiums

Basic insurance vs. Add-ons: Key differences-comparing these options helps

Filipino drivers choose the coverage that best suits their needs and budget.

Parameter	Basic coverage	Add-ons
Price	It is cheaper & offers limited coverage.	It increases the premium cost but offers far better protection.
Coverage	It provides only basic coverage, focusing mainly on third-party injuries or death and other essential damages.	It protects against unexpected events, disasters, and equipment failures.

Note, while basic insurance has several limitations, the add-ons fill the necessary gaps. For instance, the former does not cover flood damage, stolen parts, driver & passenger injuries, or vandalism; add-ons complete your policy by covering common risks faced by Filipino drivers.

Tips to choose between basic & add-ons insurance policy

Assess your budget: When choosing an insurance plan, factor in your out-of-pocket costs. Make sure to select coverage you can afford without any hassle. Furthermore, add-ons surely increase insurance costs but save thousands of pesos in repair and medical bills.

Know your risk & location: Consider your specific driving environment, such as flood-prone areas, to help Filipino drivers choose suitable add-on coverage, such as Acts of God.

Consider the vehicle’s age & usage: If yours is a brand-new car, comprehensive and add-on plans are recommended. As for older units, insurers usually have limited options.

Also Read: Don’t buy insurance without knowing these 10 key facts

Why you should consider add-ons

Here are the top benefits of choosing add-on coverage for Filipino drivers -

Peace of mind: During calamities like typhoons, power outages, and road accidents, having add-on coverage makes it easier to handle the situation with its enhanced protection.

Long-term savings: A single flood incident can cost you hundreds of thousands of pesos in repairs. Having add-on coverage on your side takes the unexpected financial burden off your shoulders.

Bottom line

For a Filipino car owner, it is essential to understand the difference between basic car insurance and add-ons. Why? To be able to opt for an innovative insurance plan that offers protection against unexpected financial liabilities arising from accident, riot, vandalism, fire, and flood. You see, basic car insurance provides only the minimum protection required by law (third-party bodily injury or death); on the other hand, add-ons offer broader coverage, including protection against unpredictable weather, road conditions, and collisions.

Remember, just by choosing the right mix of coverage - CTPL & add-ons that fit your budget and are age-appropriate for your car, you’ll not only save money in the long term but also enjoy peace of mind while on the go.

Also Read: Essential rights and duties every car insurance policyholder in the Philippines should know