Car insurance for used cars in the Philippines: Is it worth it?

New or used, a car purchase is very dear to the owner, and there’s no denying that; however, one thing where the two are distinct is in care. For example, a new car owner will usually not think twice before opting for a car insurance policy that took the best one with the most coverage. A used car owner, on the other hand, is typically seen sticking to the bare minimum, CTPL insurance, not interested much in spending money on comprehensive or add-on coverage options. In this article, we’ll discuss everything you need to know about used car insurance - need, importance, pros, cons, and much more. Giving a used car owner full clarity on the subject, but before that, let’s explore the used car market in the Philippines.

Car ownership in the Philippines

Statistically speaking, car ownership in the Philippines is on the rise. The ones with no cars are getting their first, the ones with only cars are progressing towards either a new one or replacing it with a bigger unit. In this scenario, one consistent thing is the growing demand for used cars - both as a first or another car in the house. The used cars market in the Philippines is booming, and such cars are preferred for their affordability, availability of flexible financial plans, and several options at hand.

Why do Filipinos buy used cars? Used cars are turning into a practical choice for many because of the following major reasons - Low cost - Compared to a brand new car, a used car is much more affordable. Also, unlike new cars, they do not depreciate fast, thus offering better value. Easy financing—Almost all used car dealers in the country offer flexible financing plans to customers, making the ownership process smooth and hassle-free. Quality & trust - Many certified pre-owned dealerships are there nationwide, offering pre-loved cars that have been thoroughly inspected at different levels. So many options - The used car market is growing, thriving in the Philippines. Making every type, segment, model, and make of used car available to the buyer.

Whatever the case, at the end of the day, there are more cars on the street, leading to more traffic jams, collisions, and accidents. Such a scenario calls out for car insurance and its importance, for both new and used cars.

Car insurance: Used vs New

If you are a first-time car owner or first-time used vehicle buyer, unfamiliar with used car insurance, we’d like to tell you that it is similar to regular car insurance, but tailored for your pre-loved purchase. First, let’s discuss what remains common -

Every concept of car insurance remains the same, both in the case of used and new car insurance. That is, a financial agreement is formed between the insurance company and the car owner, wherein the former will offer coverage to your vehicle (against damages, theft, and accidents) in exchange for a premium.
The type of car insurance also remains the same. So, there is the mandatory CTPL insurance covering third parties only, then there is comprehensive insurance offering wide protection (against fire, theft, natural disasters, accidents) and others like personal accident coverage, roadside assistance, loss of use, etc.

Photo from PolicyBachat

Time for the differences -

Insurance premiums are different for new and used vehicles. For the latter, it is lower due to the car’s depreciated value.
Insurance coverage is another major difference between the two. While a new car has at its disposal every coverage option under the roof, a used car might have limited access, depending on its age and condition.
Comprehensive coverage restriction. While new cars have to face no such barriers, used cars are sometimes restricted from getting a comprehensive coverage plan, especially the ones that are quite old.

Used car insurance in the Philippines

If you own a used car, you might ask yourself or others questions like, "Is getting car insurance necessary?" Or is it mandatory by law? Here, we’ll answer both their queries, starting with the first. Well, you see, buying a used car might have saved a considerable amount of money, in comparison to getting a brand new unit, but by not getting adequate insurance, you are risking it all. The thing with used cars is that no matter how many quality checks they have passed, the age and usage make them a risky investment compared to new units, in terms of safety, repair, and breakdown. Enter insurance, taking away all the risk and giving you absolute peace of mind. About it being mandatory, in the Philippines, having CTPL insurance is mandatory, irrespective of a new or used car. As mentioned earlier, it is the minimum insurance requirement and is a must for car registration. It only covers injuries/death of a third party, which leaves your vehicle unprotected.

Used car insurance - Pros & Cons

Car insurance is subjective; everyone has their own opinion on the subject. When it comes to used car insurance, the discussion goes to a whole different dimension, while car owners have views that are poles apart. Here we’ll be light on such-to-against options.

Pros of used car insurance

Those in favour of used car insurance say that it offers -

Accident coverage saves you from huge repair bills.
Theft coverage, this one is necessary, as used cars are a common target.
Protection against natural disasters like floods and typhoons, which are pretty common in the country.
Coverage against medical and hospital expenses.

Cons of used car insurance

Let us now check out the downside of used car insurance -

It might disturb your budget with a high premium cost, which usually happens with used cars with a poor safety rating.
Incomplete coverage by insurers, as they are hesitant to offer full coverage to an old, used car.

In conclusion, car insurance for a used car that is comparatively new is completely worth it, and the insurance company will also offer full coverage with no compromise. The issue arises when yours is an old unit, where there is a high premium and reluctance on the part of the insurer.

Photo from HDFC

How to choose the right insurance policy for a used car?

Choosing the right car insurance policy for your used car is a bit tricky and depends on several factors like the car's age, budget, usage, and location.

Older used cars might not qualify for comprehensive insurance, so CTPL is the only option.
Your budget plays a crucial role in deciding the car insurance policy. The more the budget, the more coverage you can get for your pre-loved car.
Analyse your car usage pattern and pick insurance accordingly. Say, if you are a daily commuter, you need more protection, in comparison to someone who only uses the car on weekends or special occasions.
Analyse your location as well, see if it's prone to car theft or floods, and get appropriate coverage.

Myths about used car insurance

Here are some common myths about car insurance that you might have come across - CTPL is enough. No, it is not. CTPL insurance only covers other people, leaving you and your car without any financial protection. Meaning you have to pay your own medical bills, hospital bills, and car repair bills. Old cars do not need insurance. No, they do. Like a new car, they too can get into an accident, get damaged in floods, or get stolen. Insurance is equally important. Car insurance is expensive for old, used cars. No, if you take care of a few things like comparing different providers, opting for a tailor-made package instead of a standard one.

Tips to lower the cost of used car insurance

Want to save money on your used car insurance? Here are some tips you can follow -

Be a good, attentive driver. Follow traffic rules and regulations, and always carry your license with you. Avoid practices that could lead to an accident or collision.
Install a dash-cam and security systems like a GPS tracker. Insurance companies favour such devices and might consider reducing your premium.
Bundle your insurance policies, like home, auto, health, etc, under one provider, this might get you a discount on the premium.
Consider increasing your deductible (the amount you pay before the claim amount kicks in), as insurance providers offer lower premiums to clients with high deductibles.
At the time of policy renewal, don’t just switch to the same provider. Instead, scan the market, compare quotes, and go for the one with the best offer on the table.

Bottom line Recently purchased a pre-owned car? And now wondering whether to spend money on insurance or not. While you can save a few pesos by limiting your insurance purchase to third-party liability insurance, as it is compulsory, not getting comprehensive coverage can cost you more in the long run. You see, used cars are more susceptible to breakdown, plus if there is a shortage of parts for replacement purposes, the repair cost would be high. Here, if you don’t have an appropriate insurance policy in hand, the entire financial burden will be on your shoulders. The solution: get your used car insured and enjoy the benefits like financial security, peace of mind, and coverage against big expenses due to an accident or natural disaster. FAQs I recently purchased a used car. Is it compulsory to insure it? In the Philippines, every car owner must get their car insured, whether new or old. You see, without CTLP insurance, car registration/renewal is impossible, which in turn is required to drive legally on the public roads. What type of car insurance policies are available for used cars? There is no major difference between car insurance policies when it comes to new and used cars. The coverage option includes CTLP, comprehensive insurance, and add-on coverages. Shall I consider comprehensive car insurance for my used car? Absolutely. Used cars, specifically old ones, are more susceptible to breakdown, and they have a high repair cost too, due to the limited availability of parts. Is it expensive or cheap to insure a used car? The cost of insurance depends on several factors, like the scope of coverage, the market value of the vehicle, and the availability/cost of parts. Meaning cars with low market value and easy parts availability would be cheaper to insure, and the ones with expensive parts will have high insurance costs. My used car is ten years old. Can I get comprehensive coverage for it? Yes, however, the availability of it can be scarce, as not all providers offer comprehensive insurance for much older cars. Prepare yourself for inspection and limited coverage. Does car insurance cover flood damage? Only if your car insurance policy has Acts of God coverage, it must either be a part of the comprehensive coverage or an add-on.