Third Party Insurance VS. Comprehensive Car Insurance


Long time car owners know that buying a new car is not as simple as paying and driving off into the sunset. If you have just purchased a brand new or used car, you may have some things to do before you can take that ride for a spin, or even register it at the Land Transportation Office (LTO).

One of the first steps is having a car insurance policy. As per 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.”

There are several types of car insurance, as well as the coverages that fall under them. However, the most basic car insurance policy that you need to get before you can register your vehicle at the LTO is Compulsory Third-Party Liability insurance or CTPL. Again, as the name suggests, this is a pre-requisite when registering your vehicle to the LTO. Read on to find out what car insurance policy is best for you when weighing up comprehensive car insurance vs 3rd party car insurance.

## Compulsory Third-Party Liability Insurance

### What is Compulsory Third-Party Liability Insurance?

Having Third-Party car insurance will provide protection to the insured individual from certain liabilities and will cover up to a hundred thousand pesos (P100,000) for the death, bodily injury, and medical expenses of third-party victims due to an accident involving the insured car.

As stated above, this mandatory third party insurance covers the death or bodily injury done to a third party person. Take note that this does not cover the injury or death of the person holding the insurance policy, the theft or damage to his/her car, or any property damage to the third party.

### Who is covered by Third-Party Insurance?

If you’re unsure as to who the third-party persons are, take a look at the quote from the Insurance Code of the Philippines. According to 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.”

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

“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 clear things up, pedestrians outside who are unfortunate enough to be caught in the accident are considered a third party. Anyone inside the car who isn't in your family within second-degree consanguinity or affinity, let’s say your friends, are also considered a third party and therefore covered by the insurance.

There is an advantage to this one, aside from discharging the insured from any liability. CTPL allows third parties to be covered by insurance, meaning that this can prevent any unsuspecting pedestrians or any third party persons to be without any assistance when involved in a car accident.
Although the question is, what if you want more than the bare minimum covered? That’s where Comprehensive Car Insurance comes in.

## Comprehensive Car Insurance

### Why do I need Comprehensive Car Insurance?

Gleaning from the facts, the Compulsory Third Party car insurance required by law does have a lot of limits. Other risks such as the damage to the insured car and other property damage, as well as injury or death of the insured and the occupants are some areas which are not covered by CTPL.

However, if you want more protection for you, your occupants, and your car from other risks, you can opt for car insurance with wider coverage. One of which is Comprehensive Car Insurance.

### What is Comprehensive Car Insurance?

Comprehensive Car Insurance is optional car insurance that covers more than other insurance policies, meaning it can provide protection against more risks, aside from those included in the CTPL policy, such as loss, personal damages, and so much more.

### What does Comprehensive Car Insurance cover?

Comprehensive Car Insurance coverage depends on indivisual car insurance providers. Specifically, these may include loss, damages, and liabilities due to third party deaths or bodily injury, personal accidents, property damage, accidental collisions, theft, malicious acts by third parties, fire and explosions, and Acts of God.

For example, if your car has been vandalized by other people, it may be covered by the insurance since it may fall under malicious acts of third party. If your car has been stolen, you can claim an amount calculated by the insurance company based on the market value and depreciation of your car.

In the happenstance that parts of the insured car are stolen, the insurance may cover them as well. However, take note that some insurance policies doesn’t cover damaged or stolen items that are inside the car.

On the other hand, you may also be covered by insurance if your car is damaged due to fire and explosions; when you’re driving, like collision to another vehicle; and while your car is being transported. In cases where you’re involved with a collision with another car, third party property damages including the others’ vehicles may also covered.

Lastly, damages done by natural disasters fall under the Acts of God, so they may be covered by the Comprehensive Car Insurance if it’s included in the policy. Specifically, damages caused by natural disasters can include those done without the intervention of man, or those caused by “floods, typhoons, hurricanes, tornadoes, hail, wildfires, tsunamis, or earthquakes.”
Some insurance companies may also offer additional policy benefits, such as road assistance, legal assistance, and rapid claims service.

## Conclusion: What is the right type of insurance coverage for me?

You’ll need to consider certain factors before purchasing the right type of insurance, but ultimately choosing one will depend on your needs. For more protection from legal and financial liabilities, theComprehensive Car Insurance is your best bet. If car thefts often happen in your area, you’re better off with it. Also, considering how flood and natural disaster-prone the Philippines is, the Acts of God Comprehensive Car Insurance policy inclusion is useful.

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