Car Insurance: Common inclusions and exclusions you need to know

The Philippines car insurance market can be challenging to navigate, especially with various policies available. Thus, it is difficult for the applicant to analyze what is included and excluded in which policy, also it poses a problem when it comes to filing a claim.

Here at Carmudi, we work towards making the car buy experience and the journey afterward for you as seamless as possible. In this article, for instance, we have tried to clarify the essential inclusions and common exclusions of car insurance policies in the Philippines. All to make sure you are well-informed and adequately protected.

So, without further ado let’s get started -

Understanding car insurance inclusions

Car insurance inclusions are the benefits and coverage that your insurance policy guarantees. These inclusions are critical in providing financial protection against various risks associated with owning and operating a vehicle.

Essential car insurance inclusions in the Philippines

Compulsory Third-Party Liability Insurance aka CTPL

CTPL insurance is a mandatory requirement for all vehicle owners in the Philippines.

Inclusions: It covers bodily injury or death of a third party due to an accident involving your vehicle.

Exclusion: It does not cover damages to your car or injury to the driver and passengers.

Also Read: Compulsory Third Party Liability (CTPL) 101: Everything a car buyer needs know

Comprehensive Car Insurance

Compared to CTPL, comprehensive car insurance offers broader protection, it typically includes several coverage/inclusions.

Common car insurance inclusions in the Philippines -

Own damage

This inclusion covers repairs or replacement costs for your vehicle in case of damage resulting from an accident, theft, fire, or natural disasters like floods and typhoons.

Theft

Comprehensive insurance policies often include coverage against theft. If the vehicle is stolen, the insurance company will compensate you based on the car's current market value or the agreed amount.

Acts of nature

Also known as "Acts of God" coverage, this inclusion protects your vehicle against natural calamities such as earthquakes, floods, typhoons, and volcanic eruptions. And given the Philippines' susceptibility to natural calamities, this inclusion is particularly crucial.

Personal accident

In the event of an accident, this inclusion provides coverage against medical expenses, disability, or death of the driver and passengers. This inclusion ensures that everyone in the vehicle is protected, not just the third parties.

Legal assistance

There are a few insurance policies that include legal assistance that covers the cost of legal services required due to incidents involving your vehicle.

Property damage

The property damage inclusion covers any sort of damage you may have caused to another person's property during an accident like buildings, vehicles, and other structures.

Common car insurance exclusions in the Philippines

There is no doubt that car insurance policies offer significant protection, however, they also come with a few exclusions. An applicant needs to understand these exclusions as it will then manage uncovered damages and avoid surprises when filing a claim. Here is a list of common exclusions -

Wear & tear

Insurance policies generally do not cover damage resulting from the normal wear and tear of the vehicle. This includes mechanical or electrical breakdowns due to aging or poor maintenance.

Illegal activities

An insurance claim may get denied if the vehicle was involved in any illegal activities or was unregistered at the time of the accident. For example, driving without a valid license or using the car for purposes not disclosed to the insurer.

Driving under influence

Insurance policies do not cover accidents that occur while the driver is under the influence of alcohol or drugs. Such exclusion emphasizes the importance of responsible driving.

Fraudulent claims

If an applicant is caught filing a fraudulent claim like staging an accident or inflating repair cost, his/her claim will be denied and will lead to legal consequences.

Unauthorized drivers

If the driver involved in the accident is not registered as an authorized driver in the insurance policy, the claim may get rejected. Therefore, it is essential to ensure that only authorized drivers operate the vehicle.

Depreciation

Insurance policies usually do not cover depreciation. This natural decline in value refers to the decrease in the vehicle's value over time.

War, terrorism, & civil unrest

Most policies exclude coverage for damages caused by war, terrorism, or civil unrest. These events are considered high-risk and unpredictable, hence the exclusion.

Also Read: Why comprehensive insurance is vital for car owners in the Philippines

Tips for choosing the right insurance policy

Now that you have understood all about car insurance policies inclusions and exclusions, it is time to select the right policy that best fits your needs and requirements. Here are some tips to make a well-informed decision -

Assess your needs

The first step is to evaluate the level of protection you need which is based on the factors like age & condition of the vehicle, applicant’s driving habits, exposed risk, etc. For example, if you live in a flood-prone area, ‘Acts of God’ coverage is necessary.

Compare Policies

Always take note to compare policies from different insurers. Analyze the coverage, premiums, deductibles, and customer reviews offered by providers. You can also use online comparison tools to make this process easier.

Read the fine print

Make sure to carefully review the policy documents, and pay attention to inclusions, exclusions, and terms & conditions. This will ensure the policyholder does not get any surprises at the time of filing the claim.

Seek professional advice

When in confusion it is advisable to consult with an insurance broker or agent. They can provide personalized advice and help you find the best coverage for your needs.

Consider the insurer’s reputation

Always go for an insurer with a good reputation for customer service and claims handling. Check reviews and ask for recommendations from friends or family.

Bottom line

Understanding the essential inclusions and common exclusions of car insurance in the Philippines is crucial for making an informed decision and ensuring adequate protection.

While CTLP is necessary and covers only damages to the third party, it is the comprehensive car insurance policy that offers extensive coverage, safeguarding you from a wide range of risks.

Overall, by carefully selecting the policy and being aware of the coverage, one can drive peacefully.

Also Read: Car insurance scams in the Philippines: What you need to know