Auto Insurance Costs In The Philippines: What To Expect

Car insurance is a necessity for vehicle owners in the Philippines. The cost of auto insurance in the Philippines varies depending on the type of insurance, the vehicle, and the insurance company. The two main types of car insurance in the Philippines are Compulsory Third Party Liability (CTPL) insurance and comprehensive car insurance. CTPL insurance is required by law and covers financial responsibilities associated with bodily injury, permanent disablement, and/or death of a third party in the event of an accident. Comprehensive insurance, on the other hand, is not mandatory but highly recommended as it covers the vehicle, the owner, and the passengers from road-related risks. The price range for CTPL insurance is ₱300 to ₱1,500 per year, while comprehensive insurance can range from ₱10,000 to ₱100,000+ per year.

Compulsory Third-Party Liability (CTPL) insurance

In the Philippines, Compulsory Third-Party Liability (CTPL) insurance is a mandatory requirement for any motor vehicle to be registered with the Land Transportation Office (LTO). It is a type of insurance coverage that will financially protect you in case you incur damage to a third party. In this context, a third party is someone who isn't a passenger in your car, such as a pedestrian. This policy doesn't cover you, the driver, or your passengers.

The CTPL insurance covers bodily injury and death for third parties, incurred as a result of the vehicle owner accidentally causing bodily injury or death arising from the use of the insured motor vehicle. It pays for expenses incurred by third parties as a result of the accident. The coverage includes surgical, medical, hospital, and funeral expenses.

The CTPL only protects third parties, including anyone who is not a member of the insured's family or employee and is not a passenger. It is a shield for the vehicle owner in case a potential third-party liability arises due to bodily injury and/or death caused by an accident involving the covered vehicle.

The basic CTPL shields the vehicle owner from any potential third-party liability arising from bodily injury and/or death caused by an accident involving the covered vehicle. This coverage offers the following:

• A total death benefit of ₱100,000 for the passenger-victim.
• ₱100,000 for third-party victims.
• For a private vehicle, ₱100,000 insurance coverage is for third-party victims only.
• Under the 'no fault' clause, a third-party victim is entitled to a sum of a maximum of ₱15,000 without proving negligence.
• The maximum reimbursable fees of CTPL insurance are ₱100,000 per year for third-party liability, subject to the schedule of indemnities.
• Annual coverage against liability for accidental death or bodily injury to third parties arising from motor vehicle accidents resulting from the fault/negligence of the assured or any authorized driver.

The CTPL insurance is valid for one year and needs to be renewed annually. The price range for CTPL insurance is ₱300 to ₱1,500 per year, depending on the type of vehicle. For private automobiles, you'll need to pay up to ₱1,000 for one year of coverage or ₱3,000 for three years of coverage. For motorcycles, you'll pay ₱500 for a one-year policy or a maximum of ₱1,000 for reimbursable fees.

To get CTPL insurance, you'll need to follow these steps:

• Prepare the CTPL insurance documentary requirements, including your vehicle's Original Receipt and Certificate of Registration, your driver's license, another valid government-issued ID, and photocopies of each document.
• Choose any of the LTO-accredited CTPL insurance providers and purchase your CTPL policy.
• Upon purchase, you will receive the policy, along with the conditions and a Certificate of Cover (COC).
• Make duplicate copies of every document and bring them to the LTO upon registration to prove that your vehicle has CTPL insurance coverage.

It's important to note that CTPL insurance is different from Comprehensive Car Insurance, which is not required by law but offers wider coverage for you and your passengers. Comprehensive insurance is more expensive, with prices ranging from ₱10,000 to ₱100,000+ per year, depending on the vehicle type and the coverage chosen.

Comprehensive car insurance

The cost of comprehensive car insurance in the Philippines varies depending on the vehicle and the level of coverage. Basic, affordable cars can be insured for less than ₱10,000 per year, while luxury vehicles can cost more than ₱100,000 per year to insure. The average cost for mid-tier vehicles is between ₱10,000 and ₱20,000 per year.

There are several factors that influence the cost of comprehensive car insurance:

• Car type and model: Expensive and luxury vehicles tend to have higher insurance costs. Sports cars, for example, are riskier and more expensive to repair, resulting in higher insurance rates.
• Vehicle condition: Brand-new units are typically more expensive to insure due to depreciation. Older cars are generally cheaper to insure.
• Safety features: While cars with more safety features may have a higher upfront cost, they often result in lower insurance premiums.
• Accessories: Customisations and additional accessories may require special coverage, as the vehicle no longer possesses its original specifications.
• Inclusions: Basic coverage is cheaper but may not provide sufficient protection. The more inclusions and add-ons, such as Acts of Nature coverage, the higher the insurance premium.
• Credit history: A good credit record and responsible financial behaviour can lead to more favourable insurance rates.
• Age: Younger and less experienced drivers are often considered higher-risk and may be subject to higher premiums.
• Profession: Occupations deemed high-risk, such as truck drivers, may be required to pay higher insurance rates.

When considering comprehensive car insurance, it is essential to compare different providers, assess your risks, and choose the coverage that best suits your needs and budget. It is also worth noting that some insurers offer discounts, special offers, and bundle deals, which can help reduce the overall cost of comprehensive car insurance.

Vehicle type and model

The vehicle type and model are significant factors in determining auto insurance costs in the Philippines. Here are some essential points to consider:

The type and model of your vehicle play a crucial role in calculating insurance costs. Generally, expensive vehicles tend to have higher insurance costs. For instance, sports cars are associated with higher insurance rates due to their higher risk and repair costs. In contrast, more affordable models from brands like Toyota, Honda, and Nissan may result in lower insurance premiums.

The brand of your vehicle also matters. According to some sources, Dodge vehicles have the highest average insurance costs, while Mazda has the lowest. Additionally, the likelihood of theft, repair costs, engine size, and safety record of the car are all taken into account. Vehicles with advanced safety features and technology may be more expensive to insure due to higher repair costs.

It's also worth noting that insurers consider the potential damage a vehicle can inflict on another car in an accident. If a particular model has a higher chance of causing severe damage, the insurer may charge more for liability insurance.

Vehicle Condition and Age

The age of your vehicle is another critical factor. Brand-new units are typically more expensive to insure due to depreciation and other factors. On the other hand, older vehicles, especially those over ten years old, may have higher premiums or even be challenging to insure due to limited parts availability.

Safety Features and Accessories

Cars equipped with numerous safety features may be slightly more expensive to purchase, but they often result in lower insurance costs. Insurers view these safety features as reducing the risk of accidents and the severity of potential injuries.

If you've customised your vehicle with accessories or modifications, you may need to apply for special coverage. This is because your vehicle no longer conforms to its original specifications, and insurers need to account for these changes in their risk assessment.

Safety features

Active Safety Features:

Active safety features are designed to prevent accidents and help you maintain control of your vehicle. These include:

• Blind Spot Monitoring: This system uses sensors on the rear bumper or side mirrors to detect vehicles in your blind spot and alerts you through visual or audio warnings. Some advanced systems can also actively intervene by steering or applying the brakes to avoid a collision.
• Adaptive Cruise Control (ACC): ACC uses forward-looking sensors, such as cameras and radar, to monitor the speed and distance of the vehicle in front. It automatically adjusts your speed to maintain a safe distance, and it can accelerate back to your preset speed when the traffic ahead clears.
• Automatic Emergency Braking (AEB): AEB detects potential collisions and activates autonomous braking to slow down the vehicle. It uses cameras and radar to identify dangerous situations and reduce speed, thereby minimising the impact of a collision. However, AEB may sometimes be activated unnecessarily, so drivers need to be cautious in certain situations, such as shadows, parked cars, or steep driveways.
• Forward Collision Warning: This system uses lasers, cameras, and/or radar to detect stopped, slowly moving, or parked vehicles ahead of you. It alerts you through beeps or vibrations on your seat, and more advanced systems may also tighten your seatbelt and pre-charge the brakes to improve your ability to stop.
• Lane Departure Warning: This feature alerts you when your tires deviate from your lane, helping you avoid accidental lane changes or drifting. It may use steering wheel intervention or gentle vibrations on your seat as a warning. The lane-keeping assist system (LKAS) is an extension of this feature, which can actively help guide your vehicle back into the correct lane.
• Anti-Lock Brake System (ABS): ABS is a crucial safety feature that helps you maintain steering control during emergency braking. It prevents your wheels from locking up, reducing the likelihood of skidding and giving you a better chance to steer away from potential dangers.

Passive Safety Features:

Passive safety features are designed to reduce the impact of collisions and protect occupants in the event of an accident:

• Seat Belts: Seat belts are a fundamental safety feature, mandated by law, that help secure occupants inside the vehicle during a collision. Modern seat belts often have adjustable upper belts and pre-tensioners for added safety and comfort.
• Airbags: Airbags are secondary restraint systems (SRS) that work in tandem with seat belts to protect occupants from frontal collisions. They deploy rapidly during accidents, cushioning the impact and preventing occupants from colliding with the windshield, steering wheel, or dashboard. Airbags are calibrated to consider the weight, position, and features of the driver and passengers.
• Child Safety Locks: These locks are installed on rear doors, giving the driver control to lock or unlock the doors and prevent children from accidentally opening them. When used in conjunction with seat belts and window locks, child safety locks provide added protection for toddlers and young children in the vehicle.
• Crumple Zones: Also known as crash zones, these are designed to absorb and distribute the impact of a collision. They help reduce the kinetic energy and distribute it to different parts of the car, thereby minimising damage and protecting occupants.

Age of driver

The age of a driver is a significant factor in determining auto insurance rates. Younger and less experienced drivers are often considered high-risk and are therefore subject to higher insurance premiums. This is because teens and young adults are statistically more likely to be involved in accidents due to their inexperience. As a driver ages and gains more experience, their insurance rates generally decrease. However, as drivers reach their senior years, premiums may increase again due to factors such as vision or hearing loss and slowed response time.

In the Philippines, younger drivers may find themselves paying more for auto insurance. While the base rate for Compulsory Third Party Liability (CTPL) insurance is relatively affordable, ranging from ₱650 to ₱1,500 per year, comprehensive car insurance can be significantly more expensive, with rates ranging from ₱10,000 to ₱100,000+ per year. The cost of comprehensive insurance depends on various factors, including the vehicle's type, model, condition, safety features, and additional coverage.

To reduce insurance costs, younger drivers can take advantage of discounts such as good student discounts and driver training discounts. Maintaining a clean driving record is also crucial in keeping insurance rates low. As drivers age and gain more experience, they may become eligible for additional discounts, such as those offered to loyal customers by some insurance companies.

Frequently asked questions