A primer on the different types of vehicle insurance

As a possible new owner of your first set of wheels, being a responsible owner doesn’t just stop with operating your motor vehicle safely and legally. While following rules and traffic regular is also your responsibility, you also have to make sure that you can protect yourself and others in the event of an accident.

The Philippines can be one of the more stressful places to drive in. The weather can take a turn for the worse and can flood certain areas, leading to damage or loss of your vehicle. Then you have the issue of vandalism or theft, especially if a vehicle is parked in an unsafe location for long periods. Toss in the irresponsible and uneducated drivers, and you’ll understand why many people would gladly shell out more money for that extra peace of mind in the event of a mishap. Unfortunately, not all insurance policies are created equal, and we have two main types of insurance that we can purchase, but these wildly differ from one another.

This is the most common type of car insurance available in the Philippines and is even a requirement before you can renew the registration of your vehicle. It is called compulsory third-party liability (CTPL) insurance because it covers property damage, disablement, death, and medical expenses of a person that was injured in a road accident involving your vehicle. Whether the vehicle is private or for commercial use, this applies to any motorized form of transportation that requires a license to operate.

The insurance cost of CTPL can be relatively affordable. Depending on your vehicle, a policy can range between P250 to P1,200 or more. What it does is protect the policyholder from any legal liability that can be filed against you, so if you don’t have enough cash or savings to cover any unforeseen circumstances, the policy can be claimed if the death, damage, or injury was caused by the operation of the insured vehicle, without having to prove fault or negligence.

Below is a table on the coverage of the policy in case of death, injury, or bodily dismemberment.

While a CTPL insurance is very easy to get and cheap, the coverage is lacking and is almost always not enough to cover damages from common road accidents. Which is why people buy comprehensive car insurance on top of their CTPL.

Up next is another popular car insurance option to get. While it is not required by the government, going the extra step in purchasing comprehensive car insurance is a smart step, especially if you use your vehicle every day. The more you expose your motor vehicle to the road, the higher the chances of damage or the unfortunate accident, so you want to be able to be prepared for those kinds of situations. It secures you, your car, and your passengers from risks you don’t have direct control over. More importantly, comprehensive car insurance policies can be customized to suit your needs and budget, adding more coverage when needed.

Own damage/Theft is the most common coverage across car insurance companies in the Philippines. It covers car damage, car loss, and damage/loss of declared accessories and spare parts due to instances like car robbery, vandalism, and fire. Actos of nature/Acts of God is also an added option to your policy, protecting your vehicle from natural disasters such as an earthquake, flood, and even animals. Personal accident is also usually thrown in, and provides financial aid to you and your passengers in the event of an accident, covering injury, disablement, or death.

Voluntary third-party liability (not to be confused with Compulsory Third Party Liability) or VTPL covers damages caused by your vehicle to property and persons. For example, the insurance company will take care of covering expenses to someone else’s car or the hospitalization or medical expenses of a third party once your basic CPTL coverage is exhausted.

As for add-ons, you can avail of legal assistance, which can aid you financially by paying for consultancy fees and hearings. Roadside assistance is also a common add-on, allowing you access to towing services, roadside repairs, and fuel deliveries. Loss of Use is also a nifty one, reimbursing any transportation expenses incurred during your vehicle’s repair period, sometimes even offering a temporary transport solution (a loaner car, for example).

Take note, however, that prices for policies for comprehensive car insurance can vary from different providers. Make sure to keep an eye out for companies that will cater to your needs and offer attractive payment options or fees. Also, don’t forget to ask about maximizing protection, and see how you can tailor fit the policy to what matters to you the most. In the case of insurance, it always pays to be prepared.