Should You Get Car Insurance Through a Bank, Dealer, or Online Broker?

by Venus Zoleta, on category "Car Insurance"

March 25, 2019


Comprehensive Car Insurance - Where to Buy Philippines | Moneymax

Looking for comprehensive car insurance coverage for the vehicle you’re buying? Need to renew your expiring policy? You’re probably wondering where to get car insurance from.

Going directly to car insurance companies to shop around for the best policy isn’t practical. Neither is randomly picking an insurance firm. The sheer number of choices in the market is overwhelming—there are nearly 70 car insurance providers in the Philippines to choose from, based on the latest Insurance Commission data.

Filipinos have three options to get car insurance: through banks, auto dealerships, and online brokerage companies that connect buyers with insurers. Unfortunately, many just settle for convenience, hastily buying comprehensive car insurance offered by banks or dealers that are financing their vehicle. Little do they know that they can find better deals for so much less through online brokers that partner with top car insurance providers.

Be an informed consumer. Before you sign up for a policy, find out what you’ll gain and lose from buying insurance through a bank, casa, or online broker. In this article, we compare the three car insurance intermediaries in terms of convenience, the variety of options, costs, and customer service.

Convenience

Comprehensive Car Insurance - Convenience

Banks and Dealers: One-Stop Shop for Buying Comprehensive Car Insurance

Banks and car dealers make it easy and quick for their clients to get car insurance. If you’re buying a car via an auto loan or in-house financing, you’ll be offered an insurance policy that’s already packaged with the car purchase. You can buy and insure your vehicle in one place at the same time. No need to go to the insurer’s office and talk with different people.
In car dealerships, filing a claim and renewal is just as convenient, as an insurance representative can readily process your request.

Online Brokers: Convenient Option for Comparison Shopping

On the other hand, getting car insurance through an online broker seems to involve more work because you’re buying an insurance plan separately from the car purchase. Nevertheless, insurance brokers save you time doing your research and calling up different insurers. Through their easy-to-use online comparison platforms, you can get car insurance quotes in just a few minutes without leaving your home or office.

For instance, you can simply visit a comparison site like Moneymax, enter your car model and other relevant details, and choose your preferred coverage. The site will then show you a personalized table that allows you to compare the benefits and premiums from major car insurance companies in the Philippines.

Car Insurance Costs

Comprehensive Car Insurance - Cost

While buying insurance through banks and auto dealers can save you a lot of time, the same can’t be said when it comes to premiums. You’ll pay a steep price for the convenience.

Ask anyone who has purchased comprehensive car insurance from a bank or dealer, and you’ll get more or less the same response: “Tatagain ka niyan sa presyo” (They’ll charge you overpriced premiums).

Auto Dealers: Priciest Car Insurance Rates

Dealers make a lot of money selling insurance to their customers. In an interview with TopGear Philippines, a former sales agent revealed that 45% of the cost of insuring a vehicle goes to commissions. This means dealership-sourced insurance premiums cost much higher than a policy bought through another mode.

Having your vehicle insured through the dealership also becomes more expensive when it includes add-on covers you might not actually need.

Banks: Lower Premiums Than Dealers Yet Still Expensive

Banks offer lower rates than dealerships, but this doesn’t mean they provide the best prices. For example, the annual premium for a 2018 Toyota Vios (PHP 500,000 fair market value or FMV) with Acts of Nature (AON) coverage costs almost PHP 15,000 with BDO Auto Insurance.

Is the price is fair enough? When you search the same car model and FMV with AON via Moneymax, you’ll find lower rates at around PHP 12,000.

Is the Free First-Year Car Insurance Worth It?

To entice customers, banks and dealers offer promos such as free comprehensive car insurance for the first year. Tempting as they may be, such freebies come with certain restrictions.

For one, your mortgaged car’s insurance will be locked in with the bank’s or dealer’s insurance partner for the entire loan term. That’s three to five years. This means you can’t get car insurance on your own when you’re dissatisfied with the insurance sourced from the bank or dealer.

While the free first-year insurance may cover AON, it may not include a Third-Party Liability coverage—you’ll have to buy it separately.

The cost of such promo would, of course, be compensated for elsewhere, like higher interest rate on your car loan. In the end, you don’t get to save money from the free one-year car insurance.

Online Brokers: Cheapest Car Insurance Rates

Comparing car insurance quotes through professional brokers is the cheapest way to get car insurance. An independent comparison platform such as Moneymax allows you to save money on car insurance by up to 50%.
Various insurance policies are gathered from the top providers in the country, enabling buyers to compare prices and choose the policy that offers the best coverage at the lowest cost. Using the car insurance comparison service comes at no cost.

Variety of Car Insurance Options

Comprehensive Car Insurance - Car Insurance Options

Banks and Dealers: Too Limited Choices

Banks and auto dealers don’t provide as many options for car insurance providers as online brokers do. Your choices are limited only to the bank’s or dealer’s accredited insurance firms. There’s no opportunity to compare the insurance policies of different providers.

When you get an auto loan from BPI, for instance, the only option is its own BPI/MS insurance. You can opt to buy insurance other than what BPI offers, but you’ll have to have it approved by the bank.

As for dealerships, their agents represent a certain insurance provider, so their recommendations for a car insurance policy may be biased.

Online Brokers: Enabling Customers to Compare a Variety of Insurers

In contrast, online brokers—with the variety of their insurance partners—don’t have that vested interest when selling a policy from a particular company.

Customer Service/Reliability

Comprehensive Car Insurance - Customer Service

The quality of customer service is also a critical consideration when choosing between a bank, dealer, or online broker for your comprehensive car insurance purchase.

Online Brokers: Helpful for Car Insurance Purchase

Online car insurance brokers can help you from finding the best deals and applying for insurance to obtaining your policy. Some can also help you when filing a claim. Moneymax, for example, has its own claims portal that can help customers with their claims.

Banks: Hit-or-Miss Customer Experience

When you visit online car discussion forums, you’ll find both positive and negative reviews about how banks handle insurance claims. Some customers don’t experience any delay, while others complain about the slow processing and non-responsive customer hotline.
The downside to getting comprehensive car insurance from a bank is that you’re left to your own devices. Since their main expertise is in banking, they’ll pass you on to another party when you’re filing a claim.

Dealers: Good Service for Certain Kinds of Claims

This is where dealers have the edge over banks. The agent can help the client with the processing of a claim with the insurance company. You can expect the casa to take care of all the legwork and repairs.

Dealers provide great service for own damage claims. However, many customers observe that dealers aren’t as helpful when it comes to third-party claims. Like banks, they’ll just make customers contact other parties to address their claims.

Deciding Where to Get Comprehensive Car Insurance

To recap the points discussed above, here’s a comparison table you can refer to:

Still torn between the three options for your car insurance purchase? Here are some tips to help you decide.

  • Ask for car insurance quotes from multiple sources. You can easily get quotes in less than five minutes from car insurance comparison sites like Moneymax. Make sure to get proposals from at least three insurance providers.
  • Compare the costs of getting insurance through the bank or dealer versus the online broker. When comparing comprehensive car insurance plans, consider not only the rates. Check also the benefits included in the package and the quality of customer service. This way, you’ll find out the insurance with the maximum benefits at the lowest price.
  • Don’t just accept what the bank or car dealer offers. Know that you can opt out of the insurance that’s bundled with the car you’re buying. More so if you think the price is unreasonable or you’re dissatisfied with the coverage. As a consumer, you have the right to shop around for options outside the bank or car dealership.
  • Make sure that the insurance company you’re going with is accredited by the bank or dealer that’s financing your vehicle. Ask your sales agent or check your car loan provider’s website.

Final Thoughts

Where should you get comprehensive car insurance: through a bank, dealership, or online broker?

All things considered, it’s still best to buy from a reputable third-party insurer through an online car insurance broker. Doing so allows you to get car insurance that’s tailor fit to your needs and budget.

If you weren’t able to do it on your previous insurance purchase, never make the same car insurance mistake with your renewal. Find the best deals on car insurance and save thousands of pesos with the help of Moneymax.