Motor Vehicle Insurance FAQ's

A. DEFINITION


1. What is a Motor Vehicle?

"Motor Vehicle" shall mean any vehicle propelled by any power other than muscular power using the public highways, but excepting road rollers, trolley cars, street-sweepers, sprinklers, lawn mowers, bulldozers, graders, fork-lifts, amphibian trucks, and cranes if not used on public highways, vehicles which run only on rails or tracks, and tractors, trailers and traction engines of all kinds used exclusively for agricultural purposes.
Trailers having any number of wheels, when propelled or intended to be propelled by attachment to a motor vehicle, shall be classified as separate motor vehicle with no power rating.

2. What is a Passenger Automobile?

"Passenger automobiles" shall mean all pneumatic-tire vehicles of types similar to those usually known under the following terms: touring car, command car, speedster, sports car, roadster, jeep, cycle, car (except motor wheel and similar small outfits which are classified with motorcycles), coupe, landaulet, closed car, limousine, cabriolet, and sedan.

Motor vehicles with changed or rebuilt bodies, such as jeepneys, jitneys, or station wagons, using a chassis of the usual pneumatic-tire passenger automobile type, shall also be classified as passenger automobile, if their net allowable carrying capacity, as determined by the Commissioner of Land Transportation, does not exceed nine passengers and if they are not used primarily for carrying freight or merchandise.

3. What is a Passenger Truck?

The distinction between "passenger truck" and "passenger automobile" shall be that of common usage: Provided, That a motor vehicle registered for more than nine passengers shall be classified as "truck": And Provided, further, That a "truck with seating compartments at the back not used for hire shall be registered under special "S" classifications. In case of dispute, the Commissioner of Land Transportation shall determine the classification to which any special type of motor vehicle belongs.

4. What is an Articulated Vehicle?

"Articulated vehicle" shall mean any motor vehicle with a trailer having no front axle and so attached that part of the trailer rests upon motor vehicle and a substantial part of the weight of the trailer and of its load is borne by the motor vehicle. Such a trailer shall be called as "semi-trailer."

5. Who is considered as Driver?

"Driver" shall mean every and any licensed operator of a motor vehicle.

6. What does Professional Driver mean?

"Professional driver" shall mean every and any driver hired or paid for driving or operating a motor vehicle, whether for private use or for hire to the public. Any person driving his own motor vehicle for hire is a professional driver.

7. Who is considered as Owner?

"Owner" shall mean the actual legal owner of a motor vehicle, in whose name such vehicle is duly registered with the Land Transportation Commission. The "owner" of a government-owned motor vehicle is the head of the office or the chief of the Bureau to which the said motor vehicle belongs.

8. What does Dealer mean?

"Dealer" shall mean every person, association, partnership, or corporation making, manufacturing, constructing, assembling, remodeling, rebuilding, or setting up motor vehicles; and every such entity acting as agent for the sale of one or more makes, styles, or kinds of motor vehicles, dealing in motor vehicles, keeping the same in stock or selling same or handling with a view to trading same.

9. What does Garage mean?

"Garage" shall mean any building in which two or more motor vehicles, either with or without drivers, are kept ready for hire to the public, but shall not include street stands, public service stations, or other public places designated by proper authority as parking spaces for motor vehicles for hire while awaiting or soliciting business.

10. What does Gross Weight mean?

"Gross weight" shall mean the measured weight of a motor vehicle plus the maximum allowable carrying capacity in merchandise, freight and/or passenger, as determined by the Commissioner of Land Transportation.

11. What are Highways?

"Highways" shall mean every public thoroughfare, public boulevard, driveway, avenue, park, alley and callejon, but shall not include roadway upon grounds owned by private persons, colleges, universities, or other similar institutions.

12. What is “Compulsory Motor Vehicle Liability Insurance (CMVLI)” or commonly known as “Compulsory Third Party Liability” (CTPL) insurance coverage?

This is a mandatory requirement for car registration. It covers the death and/or bodily injury of a Third Party victim in an accident caused by the Insured Vehicle.

Per Sec. 387 of the Omnibus Amendments to the Insurance Code (R.A. No. 10607).

“It shall be unlawful for any land transportation operator or owner of a motor vehicle to operate the same in public highways unless there is in force in relation thereto a policy of insurance or guaranty in cash or surety bond issued in accordance with the provisions of this chapter to indemnify the death, bodily injury, and/or damage to property of a third-party or passenger, as maybe, arising from the use thereof.”

13. What is a “Third Party”?

A Third Party is any person other than a Passenger as defined in the law and shall also exclude a member of the household, or a member of the family within the second degree of consanguinity or affinity of a motor vehicle owner or his employee in respect of death, bodily injury or damage to property arising out of and in the course of employment.

14. What does “Excess Bodily Injury Liability” mean?

This pertains to the amount that can still be claimed when the aggregate Limits of Liability under the CTPL coverage has already been exhausted. Coverage is no longer subject to the Schedule of Indemnities under the CTPL coverage.

15. What does “Third Party Property Damage” mean?

This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else’s property. Usually, this means damages to someone else’s car, but it also includes damages to lamp posts, telephone poles, fences, buildings or other structures your motor vehicle may hit.

16. Who is the Authorized Driver?

Any of the following:

(a) The Insured
(b) Any person driving on the Insured’s order or with his permission

Provided that the person driving is permitted, in accordance with the licensing law or other regulations, to drive the Scheduled Vehicle, or has been permitted and is not disqualified by order of a Court of Law or by reason of any enactment or regulation in that behalf, provided that for Sections I and II only of the Motor Car Policy an authorized driver shall include a duly licensed driver but whose license at the time of the accident had expired.

When an authorized driver’s license has expired, the policy will respond only under Sections I & II of the Motor Car Policy, which is the Compulsory Third Party Liability (CTPL). However, the insured is penalized for non-compliance with the law, so claims under Sections III & IV are deniable.

17. Is there a “Limitation As To Use” of the motor vehicle?

There are limitations as the usage of the covered motor vehicle and these are enumerated in the various motor vehicle insurance policy forms.

Please refer to the Motor Car Policy for more details.

18. What is the meaning of Deductible?

The deductible is the amount to be shouldered by the insured in case of a claim. This is specifically indicated on the Motor Car Policy and varies depending on the type of policy issued.

19. What is the meaning of Depreciation?

This refers to the amount equivalent to a certain percentage (%) (depending on the age of the vehicle) to be deducted from the proceeds of a claim under Section III of the Motor Car Policy. However, depreciation is not applicable in case of total loss. There is a Schedule of Depreciation in the Motor Car Policy Forms showing the rates of depreciation.

20. Is a motor car policy a valued policy or Open Policy?

Valued Policy, one which expresses on its face an agreement that the thing insured shall be valued at a specific sum
Open Policy, one in which the value of the thing insured is not agreed upon, but is left to be ascertained in case of loss.

A Motor Car Policy is an Open Policy. This means that in the event of a total loss, the insurer will pay the actual fair market value of the vehicle immediately prior to the loss subject to the sum insured which is the maximum limit for which the insurer is liable.

No depreciation shall be charged for batteries, tires, ball joints, tie rods and shock absorbers intended for motor vehicles three (3) years old and below. In case of the total loss of the vehicle insured, the Depreciation Clause shall not apply but the settlement shall be based on the provisions of Section III, Paragraph No. 2 of the policy.

It is the fair market value of the motor vehicle which is no longer subject to depreciation in case of total loss.

21. What is a COC? Is this different from a CTPL?

The COC is a Confirmation of Cover. This is the document presented to the Land Transportation Office (LTO) to register a vehicle and is the evidence that there is an existing CTPL coverage of the vehicle.

22. What do you mean Insured?

Insured, a person with an insurable interest, who stands to benefit from a policy of insurance.

23. What are the penalties for violating the Republic Act No. 10586 – An Act Penalizing Persons Driving Under the Influence of Alcohol, Dangerous Drugs, And Similar Substances, And For Other Purposes or better known as “Anti-Drunk and Drugged Driving Act of 2013”?

a) If the violation did not result in physical injuries or homicide, the penalty of three months imprisonment and a fine ranging from P20,000 to P80,000 shall be imposed.

b) If the violation resulted in physical injuries, the penalty provided in Article 263 of the Revised Penal Code or the penalty in the next succeeding subparagraph, whichever is higher, and a fine ranging from P100,000 to P200,000 shall be imposed.

c) If the violation resulted in homicide, the penalty provided in Article 249 of the Revised Penal Code (reclusion temporal) and a fine ranging from P300,000 to P500,000 shall be imposed.

d) In addition, the nonprofessional driver’s license of any person found to have violated this Act shall be confiscated and suspended for a period of 12 months for the first conviction and perpetually revoked for the second violation.

e) The professional driver’s license of any person found to have violated this law shall be confiscated and perpetually revoked for the first conviction. The perpetual revocation of a driver’s license shall disqualify the person from being granted any kind of driver’s license thereafter.

B. PROCEDURES

24. Who provides my Motor Vehicle insurance cover?

Motor Vehicle insurance coverage is available from all Insurance Companies and their designated Insurance representatives nationwide who are duly authorized by the Insurance Commission to write Motor Vehicle insurance policies.

25. What if I drive another motor vehicle owned by others and I hit somebody and/or cause damage to someone else’s property?

If you have insured under the Private and Motorcycle policy forms (Sections I, II and IV-1 and IV-2), the same extends to the insured operating a motor vehicle or motorcycle owned by others but not hired by him. But damage to vehicle or motorcycle being used by Insured is not covered.

26. Can I purchase Motor Vehicle insurance for more than one year or less than one year?

No Motor Policy is issued for less than year unless to coincide with the plate number but not less than six (6) months.

For new vehicles, the CTPL can be bought for more than a year.

27. Am I still covered by my existing insurance company if I bought another Motor Vehicle insurance policy from a different insurance company?

Yes, however in case of a claim both companies will share the loss.

28. Can I cancel my Motor Vehicle insurance policy at any time and get a refund my premium?

Yes, in the event you surrendered your policy for cancellation, the Insurance Company shall retain a premium in accordance with the Short Period Rate Scale for the time the Policy has been in force.

(However, in respect of Section I (Liability to the Public) and II (No Fault Indemnity), the cancellation made by you shall not be effective unless you secured a similar policy of insurance or surety bond to replace the policy to be cancelled or make a cash deposit sufficient amount with the Commissioner and without any gap file within five (5) working days from the date of cancellation, the required documentation with the LTO.)

Provided, under Sec. 81 of the Omnibus Amendments to the Insurance Code. If a peril insured against has existed, and the insurer has been liable for any period, however short, the insured is not entitled to return of premiums, so far as that particular risk is concerned.

29. Can I still buy Motor Vehicle insurance policy if my motor vehicle has a pre-existing damage already?

Yes, but there will be a condition that existing damages are not covered.

C. COVERAGE

30. When does my Motor Vehicle insurance coverage begin?

Your insurance coverage will start 12 noon on the date of inception of your policy and will expire on 11:59 am.

31. What types of damages to my motor vehicle, are covered under a Comprehensive Policy?

Damage to the Insured Vehicle and its accessories and spare parts due to:

A. Accidental collision or overturning, or collision or overturning consequent upon mechanical breakdown or consequent upon wear and tear;
B. Fire, external explosion, self-ignition or lightning or burglary, housebreaking or theft;
C. Malicious act;
D. Whilst in transit (including the processes of loading and unloading) incidental to such transit by road, rail, inland waterway, lift or elevator

32. Does my Own Damage cover Flood or Acts of Nature (AON)?

NO, unless you have an AON cover or endorsement for an additional premium.

However, you can buy back the aforesaid exclusion by paying additional premium to cover AON.

33. What are the standard insurance coverages under a Motor Vehicle Insurance?

There are various coverages under Motor Car Insurance:
Section I – Compulsory Third Party Liability (CTPL)
Section II – No Fault Indemnity
Section III - Loss or Damage
Section IV - Excess Liability Insurance
IV- 1 - Excess Bodily Injury
IV -2 - Third Party Property Damage
Additional Optional Cover:
Auto Passenger Personal Accident
Acts of Nature

34. Do I have an option to insure my motorcycle's back rider?

Yes, pillion riding on solo machine may be covered by paying additional premiums.

35. Why don't insurance policies in the Philippines factor in driving history and demographics in pricing premiums wherein a lower risk driver could pay a much lower premium?

There are several reasons for this. Just to name a few -

- There is no reliable data-base of driving history and experiences of licensed drivers in the Philippines, which can be used as a reliable basis, in extending premium discounts.
- There is scant evidence or lack of empirical studies that will show any reliable correlation between demographics of the drivers’ population and the incidents of motor vehicle mishaps in the Philippines.
- Motor car premium rates in the Philippines, are dictated by tariff and do not take into consideration the drivers’ history and demographics. In the faces of the policies themselves, it is the “owners” of the vehicles not the actual driver(s), who are considered assureds.

36. Can I secure my CTPL cover from another insurer while other coverages for my car are with another insurer?

In general it is best to acquire all your insurance covers from just one insurer.

D. CLAIMS

37. What shall I do if I met an accident?

You Must:

1. Report loss or damage as soon as possible to the Insurance Company.
2. Take all reasonable steps to safeguard the property loss or damage.

3. No admission, offer, promise or payment shall be made by or on behalf of the Insured without the consent of the Insurance Company to preserve the rights of action of recovery against the third party that may be legally responsible for the loss or damage.

38. What are the procedures in the event of a claim?

NOTIFY – the loss or damage to company immediately by telephone, fax, e-mail or letter with full particular details such as nature of loss, date of loss, estimated loss, contact person and telephone number for ocular inspection. Also, every demand letter, claim, writ, summons and process shall be forwarded to company immediately on receipt.

REPORT – in case of theft or other criminal act which may give rise to the loss or damage, the Insured shall give immediate notice to the Police or any authorities and cooperate with company in securing the conviction of the offender.

COOPERATE – with company appointed adjusters or surveyors to conduct an investigations.

SUBMIT – the duly accomplished Claim form together with requested documents.

39. What are the documents needed to file a claim?

a. The following are the Basic Documents to be submitted:

  • Completed Claim Form
  • Police Report
  • Affidavit
  • Photographs of the damaged portion and full view of vehicle showing plate number
  • Estimate of repair
  • Photocopy of Driver’s License Identity Card with O.R.
  • Photocopy of Car Registration with M.V.R.R.

OWN DAMAGE/THEFT
(Please Refer to the Basic Documents stated above)

b. Aside from the above documents, the following are required:

CARNAPPED/TOTAL LOSS

  • Original copy of Complaint Sheet from TMG (theft loss)
  • Original copy of Alarm Sheet from TMG (theft loss)
  • Original copy of Certificate of Non-Recovery from TMG (theft loss)
  • Full set of keys to vehicle
  • Original copy of Insurance Policy
  • Letter of Release from financial institution (if applicable)
  • Original copy of Cancellation of Chattel Mortgage (if applicable)
  • Secretary Certificate Authorizing the person who will sign in Deed of Absolute Sale & Release of Claim (for corporation only)

THIRD PARTY PROPERTY DAMAGE/BODILY INJURY/DEATH

  • Police sketch plan
  • Letters or notice of claim from Third Party insurers/claimants

Documents Required from Third Party Property Damage

For Motor Car

  • Photocopy of Driver’s License Identity Card with O.R. (if applicable only)
  • Photocopy of Car Registration with M.V.R.R. (if applicable only)
  • Photographs of the damaged portion and full view of vehicle showing plate number
  • Estimate of repair
  • Original copy of Certification of No Claim from third party Insurer

For Non-Motor

  • Proof of ownership
  • Photographs of the damage portion
  • Estimate of repair
  • Other additional documents as may be required other than the above

Documents Required from Third Party Bodily Injury

  • Photocopy of Identification (if legal of age)
  • Photocopy of Birth Certificate (if minor)
  • Original copy of Medical Certificate
  • Original copy of medical receipts with prescription
  • Copy of Income Tax Return (for loss of income)
  • Other additional documents as may be required other than the above

Documents Required from Third Party Death Claim

  • Photocopy of Identification of claimant/heirs
  • Photocopy of Birth Certificate
  • Photocopy of Marriage Certificate (if applicable)
  • Certified copy of Death Certificate
  • Original copy of Funeral Bills/receipts
  • Copy of Income Tax Return (for loss of income)
  • Other additional documents as may be required other than the above

AUTO PASSENGER PERSONAL ACCIDENT.

Documents Required from Insured:

  • Original copy of Medical Certificate
  • Original copy of medical receipts with prescription
  • Photocopy of Identification
  • Photocopy of Birth Certificate
  • Photocopy of Marriage Certificate (if applicable)
  • Certified copy of Death Certificate
  • Certified copy of Funeral Bills/receipts
  • Certification of Employment
  • Other additional documents as may be required other than the above

40. What is the time limit for me to file a claim?

All claims must be reported to your Insurance Company, as soon as possible with full particulars. Every letter, claim, writ, summons and process shall be notified or forwarded to the Insurance Company immediately on receipt.
Notice shall also be given to the Insurance Company immediately as soon you have knowledge of any impending prosecution, inquest or fatal injury in connection with any such occurrence.

In case of theft or other criminal act which may give rise to a claim, you shall give immediate notice to the Police and cooperate with the Insurance Company in securing the conviction of the offender. (Item 4. Applicable to All Sections of the Motor Car Policy)

41. What shall I do if I disagree with a claim decision made?

You can file an appeal with your Insurance Company or give notice to Insurance Commissioner, with offices in Manila, Cebu and Davao. The Insurance Commissioner is the Government official-in-charge of the faithful execution and enforcement of all laws relating to insurance and has supervision over insurance companies. He is ready at all times to render assistance in settling any controversy between an insurance company and a policyholder relating to insurance matters.

42. How will my personal accidental medical expenses be paid under my Auto Passenger Personal Accident Policy?

You will be reimbursed for accidental medical expenses incurred as a result of an accident while inside of the Scheduled Vehicle up to the limit prescribed in your motor vehicle insurance policy.

43. An accident has already occurred causing damage to the insured vehicle. Is payment of premium after the loss a ground for denial of the claim?

In the absence of any documented credit term, payment of premium after the loss has already occurred is a valid ground for denial of the claim.

44. Can my claim be denied if there was a change in ownership from the original insured and no corresponding endorsement was prepared prior to the loss?

The claim can be denied because the law requires that the insurable interest in the vehicle insured a person’s ownership over the insured which must both exist as the insurance takes effect and at the time the loss occurs. (refer to Sections 19 and 395 of the Omnibus Amendments to the Insurance Code (R.A. No. 10607)

45. The insured vehicle was carnapped by a person known to the assured and was later recovered with damages due to an accident while the carnapper was driving the vehicle. Should the insurer pay for this claim?

Under a comprehensive insurance policy carnapping and damages to the vehicle are both covered and compensable under the policy.

46. A third party claimant under the No Fault cover but the expense would exceed the No Fault cover. Can the third party claimant still claim in excess of the no fault cover?

A third party claimant is not required to sign a quit claim upon settlement. The claimant can still pursue his claim in excess of the No Fault cover.

47. Are car modifications/non-accessories covered in insurance claims?

Car modifications can be insured provided insurers are informed of the modifications and the assured pay the corresponding premiums to cover the additional risk. Insurers will have to issue an endorsement to include the modifications.

48. Whenever there's an accident involving two or more vehicles, it would create horrendous traffic (especially in EDSA during rush hour) because they don’t want to move the vehicles immediately (due to "it's not my fault" mentality) as they are waiting for the authorities to arrive for the police report, which is an important document in filing an insurance claim. (1.1) If both parties have a comprehensive insurance, does it still matter who was at fault, because either party could just take a picture on the aftermath and that could be the basis of the police report. (1.2) What should one do if one party only has TPL and has no comprehensive insurance?

1.1 There is still a need for both assureds to safeguard and preserve the integrity of the physical evidence which is necessary in the judicial determination of who is at fault, since the possibility of the insurance companies going to court and litigating among themselves on their subrogation rights, cannot be discounted entirely.

1.2 The same is true with this question. The assured must be cautioned against taking any short cuts that may later on undermine the recovery rights or prospects of recovery of the insurers against the party(s) at fault, which may thus, compel the insurers to deny their assureds’ claims instead.

The Traffic Accident Situation Form (i.e. indicated below) shall be accomplished and signed by the parties involved in the accident.

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