Cars and insurance

I built my career in the insurance industry. And every year, I have friends who would come to me and seek advice on their existing insurance. Queries would range from claims issues, premium rates and possible gaps in their current insurance. But mostly, it’s claim and pricing issues. Accidents are inevitable and no matter how cautious we are with our properties and other assets, accident/s will happen. And as far as rates are concerned, a lot of factors need to be taken into consideration before coming up with the appropriate rating. This include model and make of the car, driving history and losses, if any.

In the Philippine market where insurance is still pegged at its infancy stage, rates are still on the high side. Part of the reason is that the local insurance market is heavily taxed. Taxes would consist of the following: documentary stamps tax (12.5%), value-added tax (12%) and premium tax (5%) which is actually a municipal tax. This adds up to 27.5%. That is 27.5% on top of your actual premium. Hence, if you have a brand new Honda sedan, annual premium before tax would approximately be in the Php25,000++ range then add Php6,800++ for the tax.

Now, what if you had an accident? Keep in mind that the insurance policy is subject to a deductible or the first amount to be borne by the insured before the policy is triggered. The insurance policy would not cover every single claim. The role of the insurance is to get you back in your pecuniary position prior to the accident or loss.

Traditionally, we secure quotes from insurance agents or brokers. But now, thanks to the internet, you can easily get quotes online. You can even bind cover online because there are carriers who offer online car insurance. All you have to do is key in your car details and other relevant personal info in their website. The rates are computed real time and from there you can have it issued.