Understanding car insurance cost in the Philippines in 2024

A crucial part of vehicle ownership is securing a car insurance policy that would provide the owner and this driver protection against various risks. Once you are done buying a car, it’s time to concentrate on the insurance. Purchasing auto insurance in the Philippines is like buying an emergency kit, which one hopes never to use, but is always wise to have beside.

However, one thing that bothers most car owners, is the cost of car insurance in the Philippines. It's too damn expensive. The annual insurance premium seems like an added expenditure, but one should look at the other side i.e., the peace of mind it brings. Imagine, with the insurance policy by your side, your monthly budget will never blow up at least due to car repair costs.

If you are a new car buyer or are looking to switch insurance policy/provider and are interested in knowing the car insurance cost in 2024, then look no further. Here we have curated a complete guide for you that explores not only the cost but-

• Types of car insurance
• Factors affecting premiums
• Ways to reduce insurance cost

 

Types of car insurance in the Philippines

If we look at the broader picture, car insurance in the Philippines is segregated into two parts - Compulsory Third-Party Liability (CTLP) insurance and comprehensive car insurance. Both offer different levels of protection/coverage to the car owner and are equally important.

Also Read: Choosing the right car insurance policy in the Philippines

Compulsory Third Party Liability (CTPL) Insurance

As the name suggests, CTPL insurance is mandated by law for all vehicle owners in the Philippines. It covers liabilities for injuries or deaths caused to third parties in an accident. The coverage is limited, focusing solely on third-party liabilities, excluding the driver and vehicle.

It should be noted that all drivers are required to have CTPL insurance coverage before hitting the road. Also, it is a common misconception among new car owners that CTPL will suffice their auto insurance requirement, but that is not the case. A car owner still needs an extensive insurance policy to protect the vehicle and everyone inside.

Cost of CTPL insurance: PHP 300 to PHP 1,500 annually

CTLP insurance provider: OONA Insurance, SGI Philippines, Prudential Guarantee, Mercantile Insurance, Stronghold, and more

Comprehensive Car Insurance

Comprehensive car insurance provides extensive coverage, including third-party liabilities, own damage, theft, and natural disasters. It offers peace of mind by covering various potential risks and can be customized based on individual needs.

Depending on the applicant's requirements and budget, a comprehensive car insurance policy can be customized. More coverage would mean more premium, while minimal coverage would translate into cheap premium.

Cost of comprehensive car insurance: Less than PHP 10,000 to PHP 100,000+ annually, depending on the vehicle type and coverage extent.

Basic, affordable car	Less than PHP 10,000 annually
Mid-tier vehicle	PHP 10,000 to PHP 20,000 annually
Luxury vehicles (Land Rover, Mercedes-Benz, Audi)	More than PHP 100,000 annually

Insurance cost CTLP vs Comprehensive Car Insurance

From the above-mentioned information, it is clear that comprehensive car insurance is more expensive than CTLP coverage. However, considering the extensive coverage the former offers, the insurance cost seems fully justified.

Also Read: Compulsory Third-Party Liability Insurance (CTPL) vs. Comprehensive Insurance: What's best for you?

Add-ons and optional coverage

If the car owner is from a high-risk area with frequent accidents and car damage, certain add-ons will come in handy. Here are a few add-ons a car owner should consider when buying an insurance policy -

24/7 Roadside assistance: The insurance provider offers assistance when the car breaks down due to mechanical or electric issues. It may include benefits like vehicle assistance, personal assistance, and security assistance
Acts of nature or acts of God: This coverage provides protection against natural disasters like fire, floods, earthquakes, lightning, volcanic eruptions, and typhoons.

Personal effect coverage: It covers damage or loss of personal belongings like laptop, camera, inside the car

Loss of use: It offers a temporary car, transportation allowance, transport service, or reimbursement when the insured vehicle is at the repair shop

Legal assistance: It eases the financial burden that comes into play while settling legal issues

Pet injury coverage: If in a vehicle collision, the pet acquires injuries, this insurance will pay for vet treatments

Riots, strikes, and civil commotion insurance: The insurance provider will pay for the repair if the car happens to be at the scene of riots, strikes, or civil commotion

Add-ons	Cost
Acts of God	0.5% to 2% of car’s value
Personal Accident Cover	Starts at PHP 500 per year
Loss of use	Approx. PHP 1,000 to PHP 5,000 per year
Roadside Assistance	PHP 500 to PHP 2,000 per year

Factors affecting comprehensive car insurance costs

The cost of comprehensive car insurance heavily depends on several factors including -

Car type and model: Expensive and high-performance vehicles attract higher premiums due to increased repair costs and risk factors.

Vehicle condition: New cars often have higher premiums due to their higher value and depreciation considerations.

Safety features: Vehicles with advanced safety features may have lower premiums as they are less likely to be involved in accidents.

Driving history: A clean driving record can lead to lower premiums, while a history of accidents or violations increases costs.

Geographic location: Areas with higher risks of theft or natural disasters can influence insurance costs.

Usage and mileage: Cars used for commercial purposes or with high annual mileage may have higher premiums.

Driver’s age and experience: Younger and less experienced drivers may face higher premiums due to perceived higher risk.

Optional add-ons: Additional coverages like personal accident cover, loss of use, and roadside assistance can increase the overall premium.

Also Read: Understanding nature and acts of God coverage for your car in the Philippines

Car insurance premium computation

A car owner can compute and estimate insurance premiums beforehand, thus giving them a rough idea of the expense.

Note, that while the below-mentioned sample computation provides a rough estimate of the car insurance cost, for a more accurate figure, we’d advise you to use a car insurance provider's calculator.

Sample insurance premium computation -

To estimate your car insurance premium, an applicant first needs to determine the Insured Declared Value (IDV) of the vehicle and apply the applicable rates for own damage, theft, and other coverages. Here's a basic outline:

• Calculate IDV: Based on the car's age and depreciation.

For example, if the car is worth PHP 1.2 million and is less than six months old, the IDV might be PHP 60,000 (considering 5% depreciation).

Car’s age	Depreciation
Not exceeding 6 months	5%
Exceeding 6 months but not one 1 year	15%
Exceeding 1 year but not 2 years	20%
Exceeding 2 years but not 3 years	30%
Exceeding 3 years but not 4 years	40%
Exceeding 4 years but not 5 years	50%

• Determine premium rate: Apply the percentage rates for different coverages (e.g., 3% for own damage and theft).

Example: PHP 60,000 x 3% = PHP 1,800 for own damage and theft coverage.

Own Damage and Theft	1.25 to 3.75%
Fire only	0.50%
Theft only	1.00%

• Add additional coverages: Include costs for CTPL and other optional coverages.
  Example: PHP 1,800 (own damage and theft) + PHP 650 (CTPL) = PHP 2450 total premium.

Also Read: 15 cars that are cheaper to insure in the Philippines

Ways to reduce car insurance costs

Car insurance is a necessary expense, however, there are ways to reduce the monthly premium. Let's find out how -

1. Compare different providers: Obtain quotes from multiple insurers to find the best rates and coverage options.
2. Take advantage of discounts: Look for discounts based on safe driving records, bundled policies, and loyalty programs.
3. Increase your deductible: Opting for a higher deductible can lower your premium, though it means higher out-of-pocket costs in the event of a claim.
4. Choose a cheaper car: Less expensive and lower-risk vehicles typically have lower insurance premiums.
5. Review and adjust coverage: Assess your coverage needs and eliminate unnecessary add-ons to reduce costs.

Tips to choose the right insurance provider

Now that you know everything about car insurance costs, it is time to select the right insurance provider. Here are some tips to crack the deal.

• Evaluate coverage needs: Assess your specific requirements based on your vehicle's value, usage, and risk exposure.
• Read policy details: Understand the inclusions, exclusions, and terms of the policy thoroughly.
• Consider insurer reputation: Choose a provider with a good track record in customer service and claims processing.
• Check for discounts: Look for available discounts for safe driving, bundled policies, and no-claim bonuses.
• Seek recommendations: Ask for suggestions from friends, family, or online forums.

Bottom line

Understanding the costs and factors affecting car insurance premiums can help a car owner make informed decisions. Further, by comparing providers, taking advantage of discounts, and choosing appropriate coverage, drivers can manage their insurance expenses effectively.

Also Read: Top reasons to get your car insured in the Philippines