Don’t buy insurance without knowing these 10 key facts

If you own a car or are planning to buy one soon, then you must understand a little (if not all) about car insurance. Why? That’s because car insurance is a vital part of a car ownership journey. There’s no way you can survive without it, as it is illegal to drive without a valid insurance policy; on this ground, it is similar to a driver’s license and vehicle registration.

In addition to being a legal requirement, a car insurance policy plays a crucial role in an owner’s life by covering their financial liabilities. You see, car insurance is like a protective shield that provides coverage against unfortunate events such as damage from accidents, collisions, theft, fire, flood, or vandalism. In short, car insurance will cover expenses related to repair & replacement costs, medical bills, and third-party liabilities - expenses that can be overwhelming if they occur when you are unprepared.

Furthermore, it doesn’t matter if you drive in Metro Manila’s heavy traffic or cruise through provincial highways - insurance is a must, as unfortunate events can occur to anyone, anytime.

We understand that for a new car owner, all this can be overwhelming. Therefore, in this article, we have tried to break down everything in simple, easy-to-understand language - so that you, your car & finances are safe.

Buying car insurance in the Philippines

Getting your car insured can be confusing at first, especially for new car owners. Without the proper know-how, applicants end up paying more or getting less coverage than required, all because they don’t properly understand the policy details.

Why do Filipino drivers need proper car insurance coverage?

Narrow & congested roads, frequent typhoons, heavy traffic, and accidents are a common occurrence in the Philippines. And the repair/replacement cost of a single collision is not hidden - a single bill drains away hundreds and thousands of pesos. This much strain on the pocket can be very stressful, but with the right insurance coverage, it's all taken care of, and you get back to your everyday life soon.

Also Read: Beware applicants, don't fall for these car insurance myths

Key facts about car insurance in the Philippines

Fact 1: Not all car insurance policies are the same

Car insurance providers offer different types of policies that clients can choose based on their needs. A few common types of policies on offer are -

Compulsory Third Party Liability (CTPL): This is mandatory and required for vehicle registration. As for coverage, it protects against third-party bodily injury or death.

Comprehensive insurance: This plan is optional but highly recommended for its extensive coverage and is therefore quite costly.

Add-ons: Again, this is an optional coverage option that offers a customised insurance plan for the car owner, tailored to their needs.

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Fact 2: CTPL insurance is mandatory

As per the Philippines law and LTO regulations, CTPL insurance is mandatory for all motor vehicle owners. As mentioned above, it is part of the vehicle registration & registration renewal process: no vehicle can legally be driven on public roads without a CTPL. Here are a few key highlights -

• Protection for third parties who are injured or killed in an accident by the insured vehicle
• It holds car owners accountable for accidents or collisions caused by their vehicles.
• Driving without a CTPL will result in penalties, fines, and even vehicle impoundment.
• CTPL insurance is quite affordable, starting from PHP 299
  It does not cover the insured vehicle or the policyholder

Factor 3: Car insurance premium is influenced by several factors

Not all car insurance policies cost the same, even if the two cars are from the same brand. Premium is calculated for each policyholder after considering several factors, including -

• Car model and type
• Car’s age
• Location (flood-probe & heavy-traffic area)
• Driving record
• Claim history

Factor 4: Comprehensive insurance offers wider protection

As mentioned above, comprehensive insurance provides wider protection. Unlike CTPL insurance, it protects the insured vehicle and its owners. A policyholder even has the option to enhance comprehensive coverage by adding popular add-ons like -

• Acts of Nature
• Roadside assistance
• Personal accident coverage
• Car accessories protection
• Loss of use
• Engine protection
• Third Party Property Damage coverage
• Riots, Strikes, and Civil Commotion (RSCC) coverage
• Lost wage recovery

Factor 5: Car insurance claims aren’t always approved

Yes, car insurance is essential because it provides financial protection for car owners. However, things aren’t always as straightforward as they seem. You see, a provider has the right to deny a claim if the applicant violates policy rules. Here are common reasons for claim delay/denial -

• Driving without reliance
• Driving under the influence
• Late or incomplete submission of documents
• False information
• Unapproved usage of the vehicle (for ride-hailing services)

Also Read: Filing a car insurance claim? Here are the papers you must prepare

Factor 6: Deductibles can increase/decrease insurance costs

A car insurance deductible is the amount a policyholder pays before the insurer pays the settlement amount. A policyholder can choose the deductible amount, which influences the premium. For example, a higher deductible results in a lower premium, and vice versa.

Art of choosing the right deductible -

It is recommended to choose a deductible you can easily pay out of pocket in the event of an accident. Many Filipino drivers regret choosing high deductibles to save a little on their premiums.

Factor 7:Choosing a reputed provider matters

Do you know that choosing a well-established provider is more important than going for a cheap premium? A cheap insurer can trouble you severely at the time of distress. Here is a checklist to follow when selecting an insurance provider -

• Good customer reviews
• Speedy claim process
• 24/7 customer support
• Availability of numerous accredited repair shops
• Insurance Commission certification

Factor 8: Claim filing requires proper documentation

Whenever the need arises, you can file a claim; adequate procedures and document submission are a must. Here are the key requirements to file a claim -

• Notify the insurer as soon as possible
• Contact local authorities, secure a police report
• Click photos of the damage and the incident scene
• Gather and submit all required documents
• Duly accomplished claim form
• Cooperate with the adjuster
• Wait for claim approval

Factor 9: Acts of God coverage is not automatically included

Typhoons, floods, and earthquakes are nothing new to Filipinos. Every year, many vehicles are damaged by the fury of nature, and this add-on helps financially support you during tough times. However, every policyholder must confirm whether this add-on is included, as it is not standard.

Factor 10: Save by asking for loyalty discounts & comparing quotes

It is always a good idea to compare quotes from at least two to three providers when selecting an insurance provider or renewing the policy. Also, it is recommended to ask for loyalty discounts if you have a long association with the provider. Don’t forget about No Claim Bonus (NCB), which reduces your premium if no claim was filed the previous year.

Also Read: Here’s how to easily obtain car insurance quotes online

Note: when comparing insurance plans, don’t stop at the premium; also, compare coverage limits, add-ons, deductibles, the claim process, and customer support.

Also Read: Car insurance sorted? Now follow these essential steps

Bottom line

Car insurance is essential for Filipino car owners, but for many, the process seems confusing and overwhelming. If you are a new car owner, make sure to read the ten key factors before buying a car insurance policy. This practice will help you make smarter decisions, save money, and get protection from unexpected expenses.

FAQs

Q1. 
Ans. CTPL insurance is required by law because it ensures financial compensation for third parties who are injured or killed in an accident, holds vehicle owners accountable for harm, and is required for both vehicle registration and renewal.

Q2. What is the most essential thing to check before buying car insurance?
Ans. When buying car insurance, remember to review the policy for inclusion and exclusion.

Q3. Do all car insurance providers have the same coverage?
Ans. No. Different car insurance providers offer different coverage at varied prices.

Q4. What documents are required to file an insurance claim?
Ans. Policyholders usually need to submit the following documents: vehicle OR/CR, valid ID, police report, and driver’s license.

Q5. How can I save money on car insurance?
Ans. You can save money on insurance by comparing quotes, choosing reasonable deductibles, and checking for loyalty discounts.

Q6. Does comprehensive insurance cover flood damage?
Ans. Yes, but only if your comprehensive plan includes coverage for Acts of God.

Also Read: No car insurance? Here’s what all wrong can happen in the Philippines