You might think that motor insurance is just another expense. After all, doesn't it feel frustrating to realize that you paid for a year's policy but didn’t get something in return?
Ironically, that's something you should be thankful for. Not making any car insurance claims means you traversed roads safely in the past year. But being safe last year doesn’t mean you won’t face any road mishaps this year.
The importance of car insurance is not very obvious to everyone, especially for new car owners and drivers. However, vehicle insurance gives you a safety net in times of unfortunate incidents. The car insurance premium you’re paying can secure yourself, your loved ones, and your vehicle.
You can't always prevent accidents, but you can protect yourself financially if or when it happens. Keep reading to know more about the importance of car insurance and how you can choose the right one for your needs.
What is the Purpose of Car Insurance?
It may have taken you years to plan your car purchase. You've thought about the color, the make, the brand, and especially the price each night before you go to sleep for the past three years. You wondered whether a brand-new car is too much or a second-hand car would suffice.
After buying the car, you searched for ways to earn extra money for the installments. You even sometimes struggled to secure funds for maintenance.
Your car is valuable, sentimental, and a symbol of your hard work. One of the best ways to take care of it is to get car insurance.
Financial and liability protection are two important benefits you can get from a car insurance policy. With protection, you ensure that your hard-earned investment is paid off in times of accidents. You’re even saved from paying for all expenses out of pocket in case a third party is involved in the mishap.
The Importance of Car Insurance: Why Should I Have One?
Car insurance plans can’t stop a calamity or prevent an accident. However, car insurance can help you save money on repair and medical bills should your vehicle figure in an accident.
Here are the reasons you should consider getting a car insurance plan for your vehicle today.
✔️ Car Insurance is Required by Law
Every registered vehicle in the Philippines must get at least a basic Compulsory Third Party Liability (CTPL) car insurance. This policy protects you from any possible liabilities to a third party (meaning any person other than a passenger, a family member, or a household member of the vehicle’s owner), including physical injuries and death. CTPL is one of the requirements before you can register your car with the Land Transportation Office (LTO).
Owners of new vehicles usually don't need to worry about getting comprehensive car insurance, which provides full coverage car insurance policy benefits, for at least one year. This is because most policies are free for the first year upon purchase of a new unit.
✔️ It Protects You from Theft
The importance of vehicle insurance shouldn’t be ignored, especially when hundreds of cars are stolen yearly. We’ve all heard horror stories of people stealing someone else's beloved vehicle.
No one wants their car taken away against their will, but it’s a possibility that everyone should prepare for. If your vehicle is stolen or vandalized, your insurance company can cover your loss.
Although the New Anti-Carnapping Law of the Philippines makes car theft a non-bailable offense, there was a recorded number of 93 car theft incidents in 2022. Unfortunately for car owners, vehicles can still vanish anytime.
Here comes the importance of car insurance. Your policy can cover repairs on damage like broken windows, locks, and ignition systems. Depending on your premium, the insurance company can also cover the current value of your car.
✔️ It Covers Damage Caused by Natural Disasters
On average, 20 tropical storms enter the Philippines every year, around five of which are destructive. Filipinos usually prepare food and emergency kits in case of calamities. We also make sure our homes are strong enough to survive flooding and strong winds.
However, protecting a vehicle from flooding and other natural disasters is more difficult. A flood or an earthquake can easily damage your beloved ride.
With auto insurance, you don’t have to worry about a storm wreaking havoc on your vehicle. Auto insurance covers damage caused by disasters, easing the financial burden you might carry in times of crisis.
In car insurance parlance, these natural disasters are known as acts of nature or acts of God. Depending on how the insurance company defines the term, an act of nature or act of God is generally any incident or peril out of a human being’s control, such as volcanic eruption, earthquake, landslide, flood, and civil commotion.
✔️ You May Not Have to Pay For Upfront Expenses
Another importance of car insurance to consider is that you may not have to pay for repairs and even hospitalization in the event of an accident. Some insurance companies cover an insured car’s passengers and shoulder their medical expenses.
Your policy may also cover the vehicle's damage. You may not have to pay for any repair, depending on your insurance policy. When you and your vehicle experience any trouble, all you have to do is to call your insurance provider to make a claim.
✔️ You Can File a Claim Easily
One of the benefits of having comprehensive car insurance is that filing a claim can be relatively easy. At the onset, your insurance company will give you a list of requirements for the claim. They'll also give you instructions on what to do with your car, a list of accredited car repair shops, and a list of documents you need to submit.
Once you’ve completed all the requirements, you just have to wait for your claim to be processed.
✔️ Insuring Your Car Saves You Money
If anything goes wrong with you and your car and you don’t have insurance, you have to shoulder the expenses for car repairs and medical bills. Apart from spending money on such costs, you may also feel emotionally stressed.
Think of the importance of vehicle insurance as an investment more than an expense that you will immediately benefit from.
How to Choose the Right Car Insurance
There are many car insurance providers in the market, making it a bit confusing—and even intimidating—to choose the right one. Here are some factors to consider when choosing a car insurance policy:
👉 Determine Your Needs
Sit down and list your topmost priority when evaluating the importance of car insurance for you and your vehicle. For example, if your car is expensive, or you simply want a higher level of protection for your vehicle, you might need to add more coverage to your insurance policy.
👉 Compare Car Insurance and Ask Around
Ask family and friends about their car insurance policies. Ask about their experience with the insurance company, especially when it comes to processing claims. The companies referred to by your loved ones can be the starting point in your research.
However, keep in mind that it's still best to shop around. Use an online comparison tool like Moneymax for a faster and more convenient search.
👉 Assess Car Insurance Benefits and Features
Some car policies have more features and benefits than others. Do your research first and compare various policies in the market.
Make sure you gather as much information as you can before choosing the best car insurance coverage. This way, you can make the right decision in the end.
How Do I Cut Costs on My Car Insurance Policy?
Price is one of the main reasons some car owners don't get their vehicles insured. On average, a car owner should allot at least around ₱10,000 every year, depending on the vehicle make and type. Car insurance plans for SUVs can reach up to ₱30,000 each year depending on the chosen coverage.
So, is there a way to lower the cost of car insurance policies? The answer is a big yes! Here are a few tricks:
🚗 Check Multi-Car Insurance Packages
If you own several vehicles, take advantage of multi-car discounts offered by car insurance companies. The concept is similar to how wholesale purchases are cheaper compared to retail prices. Buying policies in bulk for a few vehicles and drivers can lower the cost of insurance for each one.
🚗 Don't Overuse Your Car
One of the most important questions insurers ask is how many kilometers the vehicle has traveled in a year. Mileage is an indicator of how often you use the vehicle. If the number reflected on your car’s odometer is low, then your policy might cost less. An obvious way to lower your car’s mileage is to use public transport when you can.
🚗 Drive Responsibly
Insurers are also keen about the number of claims you've made. Making car insurance claims means you've gotten involved in accidents. Most of the time, accidents are indicators of how risky and dangerous you are as a driver.
Some insurance companies also search for your demerit points to check the violations you incurred on the road. If your demerit points are high, your riskiness as a driver increases. Your premium follows the surge.
🚗 Install Anti-Theft Devices
Insurers often offer discounts for vehicles installed with an anti-theft system. You can choose a simple car alarm and vehicle camera or ask your insurance agent for recommendations.
But if your only purpose is to lower your insurance cost, then compare the price of the anti-theft system against the cost you’ll potentially save from the premium discount. Is the savings worth the hassle of finding and installing the best anti-theft device?
No one wants to be in a car accident, but you still shouldn't ignore the importance of car insurance in the Philippines. It's better to be safe than sorry.
A car insurance policy ensures that you won't have to be burdened with too many expenses in case you figure in a road accident. Sure, it’s an added expense, but it’s one that will give you peace of mind while you’re on the road.
While you're here, you might as well take a look at car insurance options to consider. Get a free quote from Moneymax so you can compare various providers and find the best deal.
|Car Insurance Company||Maximum Total Sum Insured||CTPL Coverage||Own Damage & Theft Coverage||Acts of Nature Coverage||Death or Disablement Coverage|
The Mercantile Insurance Corporation
OONA Insurance (formerly MAPFRE)
-  Land Transportation Office Memorandum Circular No. AVT-2015-1975
-  Republic Act 10883 (Official Gazette)
-  Metro Manila crime rate down – NCPRO (Philstar, 2023)
-  LTO hopes ‘premium’ license cards to curb road accidents (Philippine News Agency, 2020)