Car ownership doesn’t stop at buying your own vehicle. A responsible driver must always have car insurance.
With the high occurrence of accidents and the nature of the traffic situation, it doesn’t make sense to forego insurance coverage. If this is your first time to own a car, shopping around for car insurance can be quite daunting. But the time and effort in searching for the right coverage is well worth it, especially if you encounter unfortunate circumstances while on the road.
Make the search easier by following this guide to car insurance for first timers:
- What are the factors that affect the insurance rate?
Comprehensive car insurance doesn’t come with fixed rates. The rates you’ll end up with will depend on factors such as age, usage, car type, and car model.
Older cars are more expensive to insure since these are more prone to breakdowns. Cars for commercial use also come with higher insurance costs compared to personal ones, since regularly used vehicles deteriorate faster.
Do you drive a Mercedes or other luxury vehicle? Brace yourself for higher insurance costs, since your car has more expensive parts that will affect costs when it’s time to claim them. Same with SUVs, trucks, and other bigger automobiles – the size of the vehicle makes it more likely to cause serious damage in case of collisions.
- How does a car insurance company earn from me?
There are three ways in which an insurance company can earn from their clients. First is the premium, which they place in interest-earning investments that can grow their funds. Insurance companies profit greatly from the interests earned from premium fees.
Second, there’s the underwriting. This is income derived from the difference between the amount of money the insurance collects for policies and the amount of money they release when claims are filed.
Lastly, there’s re-insurance, in which the insurance companies purchase policies for themselves. This keeps them in business when they have too many claims.
- What are the basic steps in getting a comprehensive policy?
First, compare providers. There are more than 60 policy providers in the Philippines, which makes shopping around quite a Herculean task. Good thing there are comparison platforms you can easily search online, which compare each provider and break down the pros and cons for you to understand easily. This also makes choosing unbiased, compared to talking to just one or two representatives.
Second, consider add-ons. If money is not an issue, why not add features such as Loss of Use, Acts of Nature, and Road Assistance to your policy?
Third, gather the necessary requirements. Paperwork essentials include the original receipt of your vehicle, your driver’s license, and your car’s registration certificate. You may also be required to provide another government ID.
Third, wait for your policy and read the fine print. Many are guilty of ignoring this, which can prove catastrophic when it’s time to claim your insurance. Consult your insurance officer about participation fees and other terms that are unclear to you.