The Different Levels of Car Insurance in the Philippines
Having car insurance has become more of a necessity than a luxury these days. In fact, it’s one of the best tools you can take advantage of when it comes to providing financial protection against physical damages or injuries resulting from vehicular accidents, traffic collisions, and natural calamities.
But more than that, a vehicle insurance gives you an extremely important benefit money can’t buy: peace of mind. This comes in many forms: not worrying where you’ll get the money to pay for your hospital bills and car repair; not fearing how you’ll pay for the injuries of other people; and not fretting about how your family will survive if you’re bedridden and unable to work for a long time.
Car insurance is definitely something that you need to invest in—no doubt about that. And one of the most important steps you need to do is to become more informed about the insurance options that are available to you. That way, you get to choose the best ones that fit your needs and your budget.
There are different types of car insurance policies today, although generally, all of them fall under two categories: third-party liability insurance and first-party insurance. Here we explain the different type of car insurance that are available in the Philippines:
## Third Party Liability Insurance
The term “third party” is the person/s involved in the accident, or the other person/s whose property the insurance policy holder has impaired or damaged. Generally, this insurance will cover for any wrongdoing that the policy-owner has made to other people (and their possessions).
### Compulsory Third Party Liability Insurance
Third Party insurance is the Compulsory Third Party Liability Insurance (CTPL). The CTPL covers a car-insured individual from financial responsibilities or indemnity that arises from injuring or killing a person/s.
This is the most basic and least expensive vehicle insurance coverage that all drivers are required to have, and the state requires every driver to get this insurance before they can register their car.
### Property Damage Or Voluntary Third Party Liability-property Damage
This kind of vehicle insurance covers third party vehicles or properties that have been damaged by the insured person. It is often paired with the Compulsory Third Party Liability Insurance for better overall protection.
## First Party Insurance
First party insurance covers casualties that the insurance holder or his passengers experience in an accident or collision. It comes in many forms, and is usually important to include in your policy. First party insurance is given to the insurance holder and passengers in the following events:
- The accident wasn’t the fault of the policy owner.
- Both parties weren’t at fault in the accident.
- It was hit-and-run situation (the driver at fault wasn’t there).
- The driver who caused the accident doesn’t have enough money to repair for the damages he caused to the car insurance holder.
### Comprehensive Car Insurance
The word “comprehensive” is actually a misleading term. When you say “comprehensive”, people often assume that the insurance has “complete” coverage from all possible damages.
The truth is that this type of insurance varies, depending on the company. There are some insurance companies that add more benefits, but there are basic coverages that are included in almost all insurance packages. They include the following:
Theft / Damage covers all damages/loss to the vehicle (including spare parts and declared accessories) and car loss due to the following:
- Damage during transport
Any damages made while a car is being shipped or moved by a rail, lift, and etcetera.
- External explosion, or fire
Any damages caused or started by fire from external sources, or those caused by self-ignition.
- Impairment due to driving
These are damages created during transporting the vehicle, such as hitting a post or a stationary vehicle.
- Theft and vandalism
Occasions where some parts of the car are stolen. The insured person will have to pay for the full cost of a part if the value of replacement is snot more than the value of the deductible
- Robbery or carnapping
The insured can claim up to the Fair Market Value of the vehicle in case the car is not recovered. Computation of the Fair Market Value is based on the car’s value minus it depreciation value. Keep in mind that possessions inside the vehicle and damages created by natural disaster are not covered. Factors such as falling trees and earth cracking open.
### Add-on Coverages For Comprehensive Car Insurance
Some drivers have special cases that require a little more coverage than the average motorist. The good news is that there are various kinds of vehicle insurance coverages that cater to those with special needs, especially for the comprehensive insurance package. Some of them include:
- Loss of use
The insurer will pay for the transportation expenses of the insured while waiting for the car to be repaired. There are some companies that offer temporary transport as well.
- Roadside service
This coverage includes services that will depend on the insurance provider such as towing services, fuel deliveries, hotel accommodations, and road side repairs among others. Note that not all companies have these coverages. They also don’t offer the exact variation and benefits. It’s best to compare policies first.
### Excess Bodily Injury Or Voluntary Third Party Liability (Vtpl) – Bodily Injury
Under the Compulsory Third Party Liability car insurance, medical or death compensation for injured third parties will cover only up to P100, 000. Once it exceeds this amount, then the Comprehensive Car Insurance (under the Voluntary Third Party Liability) will take effect.
- Auto Personal Accident
This kind of insurance covers medical, funeral, or hospitalization expenses for the injuries or deaths of other people riding the vehicle.
- Acts Of Nature
This covers damages caused by nature, such as typhoon, flood, earthquakes, and other calamities. This is a very important coverage, especially in the Philippines, which is part of the Pacific Ring of Fire and Storm Belt.
Keep in mind that Acts of Nature (AON) is required for mortgaged cars since the mortgagee has a higher stake in the car’s good condition until the payment has been made in full.
These are some of the various types of car insurance options we have today. And while you have the freedom to choose only the cheapest ones, we personally think that cutting corners (even when you can afford it) is a huge mistake.
A single accident can just as easily drain out your hard-earned savings in one blink of an eye—and it doesn’t matter whether it’s your fault or not. In the end, it’s always better to be safe than sorry.