Buying car insurance is a lot like buying a fire extinguisher: you pray that you’ll never need it, but you feel better knowing it’s there anyway. However, many car owners are concerned about auto insurance cost and whether they can afford it or not.
You might be wondering: “Why does car insurance cost so much?” While you may think of the cost of car insurance as an added expense, it’s worth knowing that the annual premiums are there for a reason. You’re buying not just an insurance policy but also peace of mind knowing your budget won’t blow up should you need to bring your car to the casa for repair.
What you can do is research on auto insurance costs, compare, and find the policy that fits your needs at a rate that fits your budget.
Here’s what you should know about car insurance costs in the Philippines.
How Much Does CTPL Insurance Cost?
CPTL Insurance Price Range: PHP 650 to PHP 1,300 per year
In the Philippines, car owners are required to get Compulsory Third-Party Liability (CTPL). This type of car insurance covers passengers or third parties who get injured or killed due to an accident involving your car. It’s recommended to get CTPL insurance before vehicle registration with the Land Transportation Office (LTO).
CTPL insurance costs a minimum of PHP 650 annually for private cars and covers a maximum amount of PHP 100,000 within the limits prescribed by the law.
The Insurance Commission (IC) regulates CTPL insurance premiums in the Philippines. This means CTPL rates are the same across models of the same vehicle type, and no insurance provider is allowed to charge more than what’s set by the IC.
Here are the IC-prescribed annual CTPL insurance premiums in the Philippines:
Private vehicles: PHP 650.40
Light and medium trucks (not exceeding 3,930 kg.): PHP 700.40
Heavy trucks (more than 3,930 k.g.): PHP 1,290.40
Motorcycles: PHP 340.40
How Much Does Comprehensive Car Insurance Cost?
Comprehensive Car Insurance Price Range: PHP 8,000 to PHP 30,000+ per year
Aside from the basic CTPL coverage, you may also opt to extend your auto insurance to cover other untoward incidents such as road accidents, car theft, or natural calamities. Extending your car insurance coverage can be helpful if you’ve invested in a luxury vehicle, or if you live in a flood-prone area.
For basic vehicles on the lower end of the price scale, the average cost of a good car insurance policy may range from around PHP 12,000 to PHP 20,000 per year. That’s more or less PHP 1,000 per month.
To find out how much it will cost you to insure your vehicle, compare cheap comprehensive insurance quotes for free at Moneymax. Using this auto insurance online comparison tool will let you know that, for example, if you own a 2018 Toyota Vios J Base Model 1.3L Gas M/T, the cheapest policy of car insurance will cost you in an estimate of PHP 12,800.
Factors That Affect Comprehensive Car Insurance Cost
The cost of your comprehensive insurance premium relies heavily on a number of criteria, mainly the market value of your vehicle. As a rule, insurance premiums for brand-new vehicles are higher than that of second-hand vehicles due to factors such as depreciation. If you’re buying a new car, chances are that your dealer will have either in-house insurance or a list of accredited insurance providers on hand for you to consider buying from. Remember that it is not necessary to buy from such dealers. You have the option to choose.
Car insurance premiums may cost even higher depending on your car’s value and type, i.e. whether it’s a sedan, sports car, or an SUV. SUVs, for instance, cost more than PHP 30,000 to insure per year.
What to Consider When Shopping for a Comprehensive Policy
You can get basic CTPL from any auto insurance provider, but you can also purchase additional coverage such as voluntary third-party liability, excess bodily injury, property damage, and roadside assistance.
Aside from third-party liability cover, there are other types of coverage one must consider when shopping for a policy.
Own Damage and Theft cover reimburses the car owner in case their vehicle gets damaged or stolen.
Acts of Nature (a.k.a. Acts of God) cover is ideal for those at high risk for natural calamities such as floods, typhoons, and earthquakes.
Personal Accident cover is usually separate from car insurance in that it covers the medical expenses of the vehicle’s driver and/ or passengers in an accident.
Loss of Use cover reimburses the additional expenses incurred by car owners whose vehicles undergo repairs after an accident.
Read more: 5 Types of Car Insurance Coverage Explained
How to Compute and Estimate Your Car Insurance Premium
To give you an idea of how insurers compute your car insurance premium, below is a sample computation you can refer to. However, take note that this computation only provides an estimation of the costs of car insurance in the Philippines. For a more accurate price, you may request for a free car insurance quote from Moneymax.
Sample Premium Computation for Car Insurance
First, you have to compute your insured declared value, which is the value set by the insurance company based on the original price and age of the car.
Your IDV will depend on your car’s age and its percentage of depreciation. Below are the percentages you can refer to:
50% – for cars exceeding 4 years but not 5 years
40% – for cars exceeding 3 years but not 4 years
30% – for cars exceeding 2 years but not 3 years
20% – for cars exceeding 1 year but not 2 years
15% – for cars exceeding 6 months but not 1 year
5% – for cars not exceeding 6 months
So if your car, for example, is worth PHP 1.5 million and exceeds 6 months but not 1 year, your initial computation is:
PHP 1.5 million x 5% = PHP 225,000
After this, the next step is to determine your damage factor. The motor car tariff for private vehicles is as follows:
Own Damage and Theft: 1.25 to 3.75%
Theft only: 1.00%
Fire only: 0.50 %
Deductible minimum of P2,000 or 0.5% of sum insured (SI), whichever is higher.
Deductible discount will be computed as follows:
0.75% of SI, minimum P3,000: 6.00%
1.00% of SI minimum P4,000: 12.00%
Let’s say your damage factor is 3%, your premium should follow this computation:
PHP 225,000 x 3.00% = PHP 6,750
Got a discount from your insurer? Don’t forget to deduct the amount in your computation.
PHP 250 discount from provider = PHP 6,500
Add the cost of CTPL. CTPL for private cars is typically around PHP 650. So, PHP 6,500 + PHP 650.
Total amount of car insurance premium: PHP 7,150
If there are any additional fees, don’t forget to add that in your sample premium computation.
Table of Sample Premium for Different Car Models
Below is the different car insurance prices for top car models in the Philippines. These prices are based on 2019 car models and may be subject to change.
Annual Premium with Acts of Nature Coverage
Mitsubishi Mirage G4
Where to Get A Car Insurance Quote with Cost Breakdown:
Car Insurance Company
New India Assurance
The Mercantile Insurance Corporation
Looking Beyond Car Insurance Prices
While car insurance cost is a primary consideration for car owners with limited budgets, it shouldn’t be the only factor to look into when choosing an auto insurance policy. Several car insurance providers now offer specialized car insurance packages, and what’s best for you may vary depending on your specific needs.
For car owners in the Philippines, you can use Moneymax’ car insurance platform as an online calculator. This works by inputting your car details and the platform will give you the respective car insurance price.
If you can afford it, get a comprehensive car insurance plan that offers all the coverage you need. Pay close attention to the terms of the policy, as insurance providers may make some exemptions in their coverage.
To ensure you don’t overspend on your annual car insurance premium, do your research on factors that could lower or raise the price you pay in insurance. Examples include your age, location, vehicle type, participation fee, and whether the car will be used for private or commercial purposes.
As a car owner, you must exercise caution before you invest in a car and in car insurance. It’s not uncommon for shady fly-by-night operations to sell fake CTPLs at irresistibly low rates or at convenient locations close to major LTO hubs.
Whether you’re getting basic or comprehensive coverage, see to it that you choose a reputable insurance provider with a background in non-life insurance products. When you make a car insurance comparison here at Moneymax, you’ll find a variety of options from the most trusted providers in the Philippines. Start your search for the right car insurance here!
Source:  Is Buying a Car an Investment? (Caldwell, 2019)
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