CAR INSURANCE

Discussion Outline:

1. Definition of Car Insurance

2. How does Car Insurance Work?
3. Different types of Car Insurance
 Comprehensive Coverage
 Collision Coverage
 Liability Coverage
 Personal Injury Protection
 Medical Coverage
 Acts of God Coverage
4. The Different Levels of Car Insurance in the Philippines
 Third Party Liability Insurance
 Compulsory Third Party Liability Insurance
 First Party Insurance
 Comprehensive Insurance
 Add-on Coverages For Comprehensive Car Insurance
 Voluntary Third Party Liability (VTPL) – Excess Bodily Injury
5. Pros and Cons of Car Insurance
6. How much does a Car Insurance cost in the philippines cost?

What is a Car Insurance?

Car insurance protects you from a huge financial loss. It’s your financial protection against
vehicle-related damages. Car insurance can include the coverage/protection for the following:

 Property - Vehicle damages or theft.

 Liability - If you're the offending party, you are legally required to pay for damages.
 Medical - For covering medical-related expenses brought about by car-related accidents
(may also include funeral/wage-lost expenses).

How Does Car Insurance work?

Car insurance is a contract agreed upon by the insurance company and the car owner. The car
owner will pay the premiums, and the insurance company will pay any damages and losses as
stated in the insurance policy once an accident occurred. With millions of vehicles in Manila
sharing the road with you, car accidents may still happen no matter how cautious of a driver you
are. When getting a car insurance policy, the kind of insurance you prefer, the kind of vehicle
you own, and the old of your vehicle will affect the kind of policy you will acquire. Car
insurance companies offer various kind of coverage which subject to your needs. There are
standards that must be met before you can get car insurance. Car insurance can insure cars that
have a market value of not less than 250,000 PHP. Your car must be not lower than eight years
old. If your car is an older car, it will cost more to insure than a brand new one.

Different types of Car Insurance

These are the five main types of Car Insurance in the Philippines.

1. Comprehensive Coverage - It covers an array of damages or losses that are not caused by a
collision. Damages caused by third parties, vandalism or theft, natural calamities or weather
(“Acts of God”) are some examples of what can be covered under this type of insurance.

2. Collision Coverage - is a coverage that helps pay to repair or replace your car if it's damaged
in an accident with another vehicle or object, such as a fence or a tree. If you're leasing or
financing your car, collision coverage is typically required by the lender. If your car is paid off,
collision is an optional coverage on your car insurance policy.

3. Liability Coverage - If you are responsible in a car accident, Liability Insurance covers both
payment for car repairs and medical bills to the inconvenienced parties.

Two forms of Liability Coverage:

 Bodily injury Liability Coverage

 Property Damage Liability Coverage

4. Personal Injury Protection - it is an extension of car insurance that covers medical expenses
and, in many cases, lost wages. It is often called “no-fault” coverage because its inherent
comprehensiveness pays out claims agnostic of who is at fault in the accident.

5. Medical Coverage - Similar to Personal Injury protection but more focused on providing
medical coverage brought about by car injury regardless if caused by the policyholder or third
party.

6. Acts of God Coverage - “AOG” or “Acts of Nature” is a type of car insurance policy that
covers and pays for car damages caused by natural catastrophes (such as earthquakes,
typhoons/floods, animal contact, fire & explosion, falling objects).

Different levels of Car Insurance in the Philippines

1. 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).

2. 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.

3. 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.

4. 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.

5. 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 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.

6. 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.

7. 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

 Acts Of Nature
Pros And Cons of Having a Car Insurance: Is it for you?

As with any financial decision, there are Pros and Cons. Let’s take a look at the good and bad
sides of having a car insurance.

Pros of Having a Car Insurance:

 Financial protection against all sorts of auto-related damages/accidents (depends on the

coverage)
 Peace of mind that you’ll have the funds to cover any unexpected damages
 Saves you money – Paying from your own pockets can be a whole lot more expensive (if
the damage is great) versus paying a premium.
 Saves you time and effort – Imagine dealing with the finances and paperwork yourself
(say you are the offending party) versus having your insurer take care of the bulk of the
work
 Peace of mind knowing that your car has protection against theft and damages and natural
calamities.

Cons of Having a Car Insurance:

 You will have to pay for it – Like any other type of insurance, you need to pay the
premium
 Deductibles – Fees that you need to pay before the insurer can begin paying for coverage
for your policy
 Your current insurance might not include coverage for other types of damages
 It’s possible you will not utilize it at all (which is a good thing, if you think about it)

How much does a Car Insurance in the Philippines Cost?

One-Year Coverage for CTPL

Vehicle Type CTPL Rate

Private cars 560

Motorcycles, Tricycles, Trailers 250

Taxis, PUJs, and Mini Buses 1,100

Light to Medium Trucks 610

Heavy Trucks and Private Buses 1,200

ACs and Tourists Cars 740

PUBs and Tourist Buses 1450

Source: Insurance Commision

If you wish to go beyond the basic CTPL coverage, a Comprehensive Car Insurance package
might be the one you need. On average (for entry-level to medium-priced cars), expect to pay
anywhere between 12,000 to 20,000 pesos (or higher) annually. Rates will vary depending on the
model and make of the car so expect to shell out more for bigger (and more expensive) vehicles.

Optional Add-ons

 Roadside Assistance
 Legal Assistance
 Loss of Use

How to apply for a Car Insurance in the Philippines

Once you’ve decided on an insurance company, you either visit the nearest branch or
connect with them by phone or online to ask for the requirements.

Here are the 4 main requirements for applying for a car insurance:

 Driver license
 Car's Original Receipt
 Car's Certificate of Registration
 Additional Government I.D