Collision insurance explained: What it covers (and what it doesn’t)

What is collision insurance?

Collision insurance is an optional coverage for your car that offers you protection against damage due to a collision with another vehicle or object, irrespective of who’s at fault.

In short, if your car gets involved in an accident, your insurance provider will bear all the repair costs.

Collision insurance vs. Comprehensive insurance

Many policyholders are confused about the differences between comprehensive and collision insurance. Many insurers offer the latter as part of the comprehensive package and others as an add-on (like Paramount Life & General Insurance’s Car-to-Car Collision Cover); however, it is good to understand the apparent differences between the two.

Common misconception among Filipino car owners

Many first-time car owners assume that CTPL, or comprehensive coverage, includes collision benefits. While it is a possibility, however, some insurers offer it as a separate or add-on coverage. Therefore, we recommend that you get complete clarity on the policy inclusions and exclusions beforehand.

Also Read: Top car insurance worries Filipino drivers face - and how to fix them

Understanding the workings of collision insurance

Application of collision insurance

One of the biggest concerns among policyholders is when collision insurance applies. Here are common scenarios in which you can claim collision coverage when your vehicle gets damaged -

• Single-vehicle accidents
• An accident due to a car crashing into another vehicle
• A car hitting stationary objects like a tree, a pole, etc

Inclusion & exclusions

Typically, collision insurance covers the following costs: car repair, towing fees, and replacement parts. What it does not cover are wear & tear, reckless driving, damage from natural calamities, and mechanical breakdowns.

Claim process

Filing for collision coverage usually involves the following steps -

Step 1: Reporting the incident to the insurer
Step 2: Notifying the local police authorities
Step 3: Gather required documents and take photos of the damage
Step 4: Cooperate with the adjuster in the inspection process
Step 5: Waiting for claim approval
Step 6: Getting the car repaired at an accredited repair shop

Pros & cons of collision insurance

Also Read: What happens when your policy expires? Renewal tips & reminders

Collision Insurance: Is It Worth It?

If your insurance provider offers collision insurance as an add-on, then deciding whether to get it is an essential question, especially given the additional cost associated with it.

Here are a few arguments as to when a Filipino driver should consider getting collision insurance -

• If your car is brand-new and high-value, then it is worth protecting your prized possession. Furthermore, the cost of coverage is small compared to the repair bills.
• If you regularly drive through high-traffic areas and busy streets, the risk of an accident is high. Thus making collision coverage worth it.
• If you are seeking a loan, then securing collision coverage is often required.

Let us now check out the situations when you can skip collision insurance -

• If you live or drive in a low-accident area.
• If you have a car that is almost 10 years old or worth less, then there’s no point in getting collision insurance, as it may cost more than what you would gain.
• You rarely drive.
• If you prefer paying via emergency funds instead of paying for collision coverage.

Overall, just ask yourself the following questions and you’ll have the answer in no time -

• What is your car’s value?
• Do you live or drive in an accident-prone area?
• How often do you drive?

Also Read: Top 10 must-have car insurance add-ons for Filipino drivers

Bottom line

Car insurance is essential for all car owners; however, the coverage varies as per the specific requirements of the policyholder. So, while CTPL insurance is a must, the rest are all optional, like comprehensive insurance and add-ons. One such optional, yet highly recommended, coverage for car owners is collision insurance.

It is a wise insurance investment for you, especially if you own a brand-new car and live or drive in an area prone to accidents. It is not suggested for old vehicles, as the cost might outweigh the benefit.

When considering any insurance coverage, whether it's collision or another type, be sure to analyse your driving habits, budget, and the car’s value. This will help you make better decisions.

FAQs

Q1. I have CTPL insurance. Will it cover my car damage?
Ans. CTPL insurance only offers coverage against third-party bodily injury or death. So, no, your car damage won’t be covered.

Q2. Is it mandatory to get collision insurance in the Philippines?
Ans. No. In the Philippines, a car owner is only required by law to obtain CTPL insurance; the rest of the coverages are optional.

Q3. What is the difference between collision and CTPL insurance?
Ans. While CTPL insurance is mandatory and does not cover damages to your car, collision insurance is not compulsory and covers damages resulting from crashes.

Q4. I have an old car. Should I get collision insurance?
Ans. Usually, no, as the repair cost of the old car may exceed the car’s value.

Q5. Can I file an insurance claim if I am at fault in an accident?
Ans. Yes, you can. Collision insurance covers car damage even if it is your fault.

Q6. I need a car loan. Would it help if I had collision insurance?
Ans. Most banks give preference to applicants with collision coverage.

Q7. What is the cost of collision insurance in the Philippines?
Ans. Collision insurance is not sold as a standalone policy (it is part of comprehensive coverage); therefore, it is not possible to state a single cost for this coverage.

Q8. Who are some of the top car insurance providers in the Philippines?
Ans. Some popular insurance providers in the Philippines include AXA Philippines, Pioneer Insurance, Standard Insurance, and SGI Philippines.

Q9. Does collision insurance cover medical bills?
Ans. No. Collision insurance only covers the cost of repairing your car.

Q10. How long does it take to process an insurance claim?
Ans. An insurance claim can get settled in 7 to 15 days or more, depending on the insurer.

Q11. What is a deductible?
Ans. A deductible is the amount you pay from your pocket before the insurance amount kicks in.

Q12. What documents are required to file an insurance claim?
Ans. To file a claim, you need to submit the following documents: OR/CR, driver’s license, photo of the damage, and police report.

Q13. Does collision coverage cover natural disasters like floods?
Ans. No. Natural disasters, such as floods, earthquakes, and typhoons, are typically covered under Acts of God coverage.

Q14. Can I file for collision insurance if I hit a tree?
Ans. Yes, collision insurance covers single-car accidents. So, be it a tree or a car roll cover, collision insurance takes care of it all.

Q15. My car is not driven frequently. Should I get collision insurance?
Ans. If your car is not driven regularly, the chances of it getting involved in a collision are relatively low, and so the need for collision insurance diminishes.

Also Read: No car, no problem: Why ‘Loss of Use’ coverage matters