Is Acts of God coverage worth it for Filipino drivers?

Car insurance in the Philippines - Basic vs. Comprehensive

When we talk about basic car insurance in the Philippines, it refers to Compulsory Third Party Liability (CTPL) insurance. It is the same insurance coverage that is mandatory by law for every motor vehicle in the country. It is needed for vehicle registration at the LTO and covers only third-party injury/death, in case the insured vehicle is at fault. It is an attempt to make roads safe for everyone.

Comprehensive car insurance is not compulsory for a motor vehicle owner to get, but because of its vast coverage, it is highly recommended. Plus, unlike the CTPL insurance, it covers the insured and his/her vehicle. It offers financial protection against the following risks: theft, fire, accident, third-party liability, etc.

What about Acts of God? Is it part of the comprehensive car insurance policy? It depends on the insurance company, while some include it under comprehensive coverage, others have it listed under add-ons. So, make sure to get clarity on the policy inclusion and exclusion with your insurance provider beforehand.

Car insurance - Usual trend among drivers

In the Philippines, most car owners usually go for CTPL insurance, due to its mandatory nature and affordable scale, from PHP 300 to PHP 1,500 per year. However, it is the new car owners or the ones with expensive purchases that opt for comprehensive coverage and sometimes even add-on coverages as needed. One such coverage that is often part of these insurance plans is the Acts of God.

Thinking, why do car owners opt for Acts of God coverage, and whether you should get it or not? Let’s find out.

Acts of God coverage - An overview

In the Philippines, Acts of God coverage refers to the protection an insurance company provides to a policyholder against natural disasters. It is called so because it is an act of god or nature and cannot be controlled or prevented by humans.

Inclusion

Most insurance plans offer Acts of God coverage as an add-on, while a few include it in comprehensive coverage.

Coverage

Acts of God coverage offers financial protection when the insured vehicle is damaged by floods, earthquakes, volcanic eruptions, landslides, typhoons, hailstorms, etc.

Example

So, if your car is damaged by falling debris during an earthquake or is submerged in floodwater, Acts of God coverage will cover the repair cost.

Why is it essential for Filipinos?

Acts of God coverage is pretty essential for a Filipino car owner for two reasons -

• The Philippines is one of the world’s most disaster-prone countries, meaning the country has a pretty high frequency of natural disasters. For instance, on average, twenty typhoons hit the country each year, along with several earthquakes and floods. Thus making vehicles prone to the dangers and damages of such events. This makes it critical for car owners to have something beyond CTPL.
• Did you know about the bad effects of weather on cars? If not, we’d like to tell you that rain and high moisture content in the air tend to damage the car’s engine, electrical system, interior, and upholstery. Car owners often face issues regarding mould and corrosion.

Example -

During a typhoon, cars face a lot of damage, and here owners without Acts of God coverage end up paying for repairs from their pocket.

Comprehensive vs. Acts of God

It is important to address the difference between comprehensive and acts of God coverage, as car owners often think that Acts of God coverage is part of comprehensive insurance. However, that’s not always the case, with most providers offering it as an add-on coverage.

A small tip -

We’d advise you to read your policy documents thoroughly if it says ‘AOG’, ‘Acts of God’, or ‘Acts of Nature’, you are covered against the several cruelties of nature.

Premium cost of Acts of God coverage

The premium cost of an insurance policy with Act of God coverage varies from one provider to another. However, you could expect a 30% increase in the premium after this add-on. Further, several factors affect the premium, including - car’s value, model, make, location, age, and insurance provider.

When a car owner should consider Acts of God coverage

A car owner is considered at risk and must try to get Acts of God coverage if -

• He/she lives in places like Metro Manila, where the drainage system is a bit poor, or in flood-prone areas like Cebu, Davao, Iloilo, and Davao del Sur.
• The car is parked in open areas almost daily.
• The car is new and/or expensive.
• The car operates in low-lying or flood-prone areas.

Limitations of Acts of God coverage

While the Acts of God coverage is considered a must-have for all its amazing benefits, it comes with a few limitations that you should be aware of. It does not include damages caused to the car due to the policyholder’s negligence. What is considered negligence, and when will you not get AON coverage?

• There was a flood warning.
• The incident was foreseeable.
• The policyholder, knowing the warning, went ahead and drove into a flooded city.

Overall, your claim will only get approved if the calamity that acted upon your car was unforeseen and within AON scope of coverage.

Pros & cons of Acts of God coverage

How to claim Acts of God coverage?

If your car got damaged during an unpredictable natural disaster, a policyholder can file a claim, for which the submission of the following documents is required -

• Incident report
• Vehicle’s Official Report (OR) and Certificate of Registration (CR)
• The policyholder’s driving license
• Estimated car value
• Estimated damage value
• Photo evidence of damage

Bottom line

Wondering whether to get Acts of God coverage or not? Well, the type of car insurance policy you should have depends on two factors - your requirements and budget. So, if you live or drive in an area prone to any kind of natural disaster, having this particular coverage will reduce the impact by compensating for the damage. But, for this protection, you’ll be required to pay a bit extra premium. So, we’d say to weigh the two costs (premium & repair cost), pick the option that saves you money in the long run. This is our recommendation based on risk and budget, now you decide.

FAQs

Q1. I am a new car owner. Is getting Acts of God coverage necessary?
Ans. No. The law only requires CTPL insurance for every car owner; the rest of the insurance coverages are optional. However, comprehensive and Acts of God coverage are highly recommended.

Q2.What is covered by Acts of God coverage?
Ans. When it comes to Acts of God coverage, insurance providers have different terms and conditions. However, this coverage typically offers protection against typhoons, earthquakes, floods, landslides, tsunamis, and volcanic eruptions.

Q3. What benefits will I receive from Acts of God coverage?
Ans. With the Acts of God coverage, you’ll enjoy benefits like reimbursement for repairs and payment for the damaged vehicle.

Q4. How much does the Acts of God coverage cost? Is it expensive?
Ans. Most insurance providers offer Acts of God coverage as an add-on to a comprehensive policy. And this particular add-on increases the total premium by around 30% (could be a bit more or less depending on the insurance provider and other specific details).

Q5.Does comprehensive car insurance include Acts of God coverage?
Ans. Not necessary, it mainly depends on the insurance provider and their terms & conditions.

Q6. What is the deductible required for Acts of God car insurance claims?
Ans. The deductible amount for Acts of God coverage varies, but is often the same amount as that of an Own Damage claim.

Q7. What to do if my car gets damaged during the flood?
Ans. Check the car properly, take photos from different angles showing the damage, and report your insurance provider asap. From here on, you’ll be guided about the claim process.