MOTOR CAR INSURANCE

HISTORY

The invention of automobile radically affected a great aspect of our lives. It changed the way how we view and value time, reduced the travel time that divided people from different places, and revolutionized our way of doing business, just to name a few.

Unfortunately, there is a cost for all the advantages we derive from the automobile. Accidents, Deaths and bodily injuries have become an inevitable cost of using the automobile. Despite this, it remains that the good it brings far outweights the bad. A reversion to the old primitive mode of transportation is unlikely, if not possible. Hence, birth of motor car insurance.

While motor car insurance cannot prevent the happening of deaths, accidents or bodily injuries, it can at least compensate for the effects of the loss or damage it brings.

Definition of Motor Car Insurance

“…a contract whereby one (the Insurer) promises for a consideration (premium) to indemnify another (the Insured) for direct loss or damage of the insured vehicle and to pay any claim for death of or bodily injury to and property damage of any Third Party caused by or arising from the ownership or operation of the vehicle.“

 

What is a Motor Vehicle?

Motor vehicle is defined as any vehicle propelled by any other power than muscular power using the public highways, except the following:

 

• Road rollers
• Trolley cars
• Street sweepers
• Sprinklers
• Lawn mowers
• Bulldozers
• Graders
• Forklift
• Amphibian trucks
• Cranes
• Vehicles that run only on trails or tracks
• Tractors, trailers and traction engines of all kinds used exclusively for agricultural purposes Trailers having a number of wheels, when propelled by attachment to a motor vehicle, shall be classified as a separate motor vehicle with no power

Those who are NOT considered as a Third Party

 

• Authorized driver;
• A member of the Insured’s household;
• Insured’s relative within 2^nddegree of consanguinity or affinity;
• An employee of the Insured; and,

Who is an Authorized Driver?

• The Insured;
• Any person with the Insured’s permission or order provided that he has:

1. A valid driver’s license;
2. An Unexpired license (except under Section I and II) or is not disqualified by order of Court of Law or by reason of any enactment or regulation in that

Coverages of Motor Insurance

 

• Physical Damage insurance covers loss or damage to the insured vehicle caused by the perils insured against in the

 

• Liability Insurance covers death/ injuries or damage to property that the Insured may inflict to other persons or third party as a result of use of the insured

 

Policy Forms generally used in the Philippines as approved bv the Insurance Commission

Private Car Policy – covers cars that are solely for private or personal use or for the Insured’s business or profession.

Commercial Vehicle Policy – all vehicles not categorized as a private car and used mainly for carrying own goods in connection with the Insured’s business except carriage of goods for hire or reward.

Motor Trade Policy – covers insurance on vehicles for sale. Examples include cars displayed in showrooms and those intended for rewards.

Motor Cycle Policy – it covers insurance arising from the use, maintenance and ownership of motor cycle.

Land Transportation Operators Policy – covers vehicles used for public transportation like taxi, buses, jeeps and other vehicles used for hire or reward.

BASIC COVERAGE OF THE MOTOR CAR INSURANCE POLICY

• Compulsory Third Party Liability (Death / Bodily Injury

is a pre-requisite for motor car registration. The reason for this is to protect the welfare of the public in cases of motor car-related accidents. Under this coverage, 1 CISP LIFE AND GENERAL INSURANCE will undertake to indemnify the Insured for all sums necessary to discharge the liability of the Insured in respect to bodily injury and/ or death to Third party. Amount of coverage is industry standard at P100,000.00 for all types of vehicles.

 

• No Fault Indemnity

1 CISP LIFE AND GENERAL INSURANCEwill pay any claim for bodily injury or death to any Third Party without the necessity of proving fault or negligence of any kind                                      provided that:

1. The total indemnity would not exceed P15,000.00; and,
2. That sufficient documents be submitted to prove to the claim such as the following:
3. Police report of the accident or any evidence sufficient to establish the claim;
4. Medical report and evidence of medical or hospital expenses; and / or,

• Death Certificate and evidence sufficient to establish the proper payee.

 

• Loss or Damage

1 CISP LIFE AND GENERAL INSURANCEwill undertake to indemnify the Insured against loss or damage to the insured vehicle including its declared accessories and spare parts resulting from:

1. Accidental collision or overturning;
2. Fire, external explosion, self-ignition;
3. Malicious act; and,
4. Damage while on an inland

 

• Excess Liability Insurance (Death/ Bodily Injury)

In case the limit of liability in Sections I and II have been exhausted, this section will cover the excess, subject to the provisions of Section I, except, the limits stated therein.

 

• Excess Liability Insurance (Property Damage)

Covers liability of the Insured against damage to third party property, subject to the limits and provisions of the policy. Excluding:

1. the property of the Insured;
2. property held in trust or in contract or custody of the Insured or member of his household or being conveyed by the insured vehicle

 

FACTORS IN MOTOR CAR INSURANCE UNDERWRITING

 

• APPLICATION FORM

The applicants are required to accomplish completely and sign 1 CISP LIFE AND GENERAL INSURANCE Motor Vehicle Insurance application form and should submit a photocopy of the vehicle’s registration certificate together with their existing policy, if any.

 

Necessary Information Required in a Motor Car Policy:

 

1. i) Full name of the Insured;
2. ii) Complete address of the Insured;

iii)    Date Issued;

1. iv) Policy period;
2. v) Complete Description of the vehicle – year/model, make, type, color, plate number, motor number, serial number, authorized capacity, LTO         file number, unladen weight, accessories;
3. vi) Limits of Liability and corresponding premium of each section;

vii)  Name and address of the mortgagee; and,

viii)  Necessary endorsements, clauses or warranties issued with policy.

 

• Applicant

The applicant must be gainfully employed and of good moral character. He/ She must duly licensed with no physical driving hazard and not less than 18 years of age.

 

• Age of Vehicle

Acceptable age limit of the vehicle should not be more than ten (10) years, older vehicles may be considered on a case to case basis.

 

• Value of the vehicle

The value of the vehicle including accessories must be at full current market value by brand, model and year. PIRA Valuation Guide provides the elements to ascertain the value of different vehicles.

 

Depreciation refers to the decrease in the value of the vehicle due to age, its use and obsolescence. The Insured will only be indemnified an amount equal to the present value (value of the vehicle less depreciation) of the vehicle.

 

SCHEDULE OF DEPRECIATION

 

In the event of claim which necessitates to replace old automobile parts with new ones, the following is the schedule of the car owner’s share / participation in the betterment:

 

Age of Vehicle                            Private Car     Commercial

1-3        –             –

Over 3-4 years                             20%                    25%

Over 4-5 years                             25%                    30%

Over 5-6 years                             30%                    35%

Over 6-7 years                             35%                    40%

Over 7 years                                 40%                    45%

Reconditioned Vehicle            45%                    45%

Batteries, Tires,

Ball Joints Tie Rods,

and Shock Absorber

(for vehicle

over three (3) years old)       45%                   50%

 

• Use of the Vehicle

Only vehicles classified, registered and used as Private and    Commercial vehicles are acceptable.

 

• Claims History

Claims history is very important in enabling 1 CISP LIFE AND GENERAL INSURANCE to check the background of the applicants.  It aims to prevent accepting insurance applications with bad loss experience from other insurance companies.

 

• Accessories

Accessories, to be covered, must be declared the vehicle make / type / model.  Policies with Own Damage/ Theft coverage must be subject to the Accessories clause.   The  limit of  liability for each accessory and  set  should not  exceed  P5,000.00  and  P20,000.00  for  all accessories  declared  covered.

 

• Period of Insurance

All motor policies must be issued and renewed for a period of one (1) year. In some instances, policies can be issued for less than a year in order to conform to the co-terminus rule of the Land Transportation Office.

 

• Payment

 All policies should issued on a cash-and-carry basis. Certificates of Cover should not be released without payment.

 

• Cancellation/Spoilage

Certificates of Cover (COC) released and used in the registration of the vehicle cannot be cancelled unless a replacement COC duly registered by the Land Transportation Office has been presented together with a written request for cancellation

 

The Insured should be required to declare the replacement COC number, insurance company and period of coverage. A photocopy of the Official receipt issued by the Land Transportation Office in the registration of the vehicle should be submitted for verification purposes. The Land Transportation Office must be given fifteen (15) days notice for any cancellation of CTPL coverage.

 

NOTE: Surrender the original copy of the policy, COC, endorsement that are cancelled or spoiled.

 

• Accommodation Business

Applications for imported cars, reconditioned vehicles, and vehicles more than ten (10) years old, vehicles listed under prohibited risks, and others not in conformity with our guidelines are to be considered as accommodation business, and therefore need sanction from the Head Office.

 

• Premium and Rates

The basis of the rates applied for different coverages are the promulgations by the Philippine Insurance Rating Association (PIRA) and approved by the Insurance Commission. The rates are computed based on the amount of insurance, classification and use of vehicle. In the case of motor fleets, loss experience is a major factor considered in rating.

For specific rates, refer to the Motor Car / Schedule of Premiums corresponding to each coverage or limits of liability. Refer to our Motor Car section for computing applications for higher TPL limits.

 

• Schedule of Deductibles

   Private Car (PC)  –                                         0.50% of the loss or damage cover with                                                                                                   minimum of P2,000.00, whichever is                                                                                                                            higher. Applicable to each and every accident

 

Commercial Vehicle (CV) –                           1.0% of the loss or damage cover with a    minimum of P3,000.00, whichever is higher.

 

***Applicable each and every accident.

 

• Additional Charges

       Documentary Stamps              –             12.5%

VAT                                                    –             12.00%

Local Government Tax             –             0.20% Based on City                                                                                                                                        or Municipality Ordinance of issuing Office

 

PROHIBITED RISKS

• Rental cars, U-drive, tourist cars and buses, and the like;

 

• All kinds of trucks carrying explosives, chemicals or cargo of flammable nature, gravel and sand, logs or timber and for mining;

 

• Heavy equipment/ machineries used in construction and in the Insured’s farm or concession such as tractor, dozers, cranes, ;

 

• Vehicles used in motor trade and auto dealers, repair shops, service stations, and garages;

 

• Jeeps – open types and stainless steel;

 

• Vehicles which do not have agencies in the Philippines for the sale of spare parts for their models or which are no longer manufactured in including Lincoln Continental, Rambler, Cadillac, Pontiac, Buick, Oldsmobile, Plymouth, Corvair, Porsche, Volvo, MG, Mercury, BMW, Alfa Romero, Jaguar, Foreign assembled cars which have agencies in the Philippines but have no available spare parts in the local market such as Chevrolet, Impala, Malibu, Pinto, Monte Carlo, Ford Granada, Mustang, LTD, Thunderbird, Dodge Coronet, Charger and the like;

 

• Ambulance, police, fire and similar type of emergency vehicles;

 

• House movers, mobile homes/ offices;

 

• Circuses, carnival and other amusement vehicles;

 

• Junk dealers including those auto dismantling and garage trucks;

 

• Sports cars including those designed or altered to approximate sports car characteristics;

 

• Tax exempt vehicles; and,

 

• Locally-assembled/ reconditioned

 

 

 

“Another layer of PROTECTION, however may LITTLE, is still BETTER than having NO PROTECTION at all.”