Truck/Commercial Vehicle Insurance 101: What Filipino business owners need to know

Truck & commercial vehicle insurance - An introduction

In the Philippines, commercial vehicles like trucks and pickups play a vital role in moving goods, materials, and other supplies across the country. It doesn’t matter if you deal in construction material, agricultural produce, groceries, automobile parts, or anything else; commercial vehicles keep the economy moving. Therefore, it becomes essential to keep these vehicles safe, which can be achieved by offering them optimum coverage.

Commercial vehicles insurance is the shield that protects commercial units from all possible risks, including accidents, natural disasters, cargo theft, and unexpected breakdowns. Otherwise, as an owner, you will have to bear all the costs, which can set you back by several thousand pesos.

But did you know that truck or commercial vehicle insurance not only offers the much-needed financial protection to the business owners, but also ensures compliance with legal requirements.

Also Read: Don't panic after an accident — Here's how to file a comprehensive claim

Why commercial vehicles insurance matters

As discussed above, commercial vehicles are like lifelines for several businesses in the country. They are revenue-generating assets for so many owners (retailers, contractors, farmers, and those dealing in logistics). In such a scenario, a commercial vehicle being stolen, flooded, or involved in an accident can be a significant blow to the business.

Since commercial vehicles travel long distances and face harsh conditions, they are susceptible to several risks, including wear & tear, accidents due to heavy traffic & challenging road conditions, cargo theft, and natural disasters.

In such circumstances, not having appropriate insurance can drain your company's resources quickly.

Commercial vehicle insurance - Understanding the basics

What is commercial vehicle insurance?

Unlike private car insurance, this policy is specifically designed for vehicles used for business purposes, such as trucks, delivery vans, and other modes of transport. Here, the insurance provider considers factors such as heavier loads, higher mileage, and the added risk of diverting to meet targets & transport goods.

Type of commercial auto insurance

Broadly speaking, motor vehicle insurance - be it commercial or private - is categorised into the mandatory Compulsory Third-Party Liability (CTPL) insurance and optional, but highly recommended Comprehensive insurance.

Let us now discuss the coverage offered for commercial vehicles in detail -

Significant advantages of commercial vehicle insurance

If you are a Filipino business owner, you need to understand the importance of commercial vehicle insurance. Here are some key benefits to further convince you -

Improves business credibility: Having proper commercial vehicle insurance helps build trust among your clients and customers. It reflects well on your character, enables you to look responsible, and your business is stable.

Legal compliance: Signing up for commercial vehicle insurance ensures compliance with government requirements.

Financial protection: In case of an accident or damage to the vehicle due to any other reason, insurance prevents a business owner from making out-of-pocket expenses.

Safeguarding drivers & employees: It reflects well on you as an owner who prioritises the well-being of your employees, drivers, and helpers, as commercial vehicle insurance ensures medical and accident benefits.

Also Read: Why every truck business needs Comprehensive Truck Insurance in the Philippines

How to buy the right commercial vehicle coverage

Buying commercial vehicle insurance is one thing, but getting the right coverage can make all the difference. Here are some key tips to consider when buying truck/commercial vehicle insurance -

Assess your needs: Just as you assess your needs while buying private car insurance, it is essential to evaluate your commercial vehicle insurance needs as well. Determine if CTPL insurance is sufficient for your business or if you require comprehensive or additional coverages, such as cargo and fleet.

Compare quotes: After analysing your needs, it is time to compare quotes from multiple providers. Here, do not just concentrate on the premium, but look for attributes like good customer service, preferably 24/7, a fast claim process, and optimum coverage.

Read the fine print: Whatever provider or policy you choose, make sure to read the fine print, check policy inclusions, exclusions, terms, and all the personal & vehicle-related details.

What factors affect the commercial vehicle premium

Several factors influence the cost of commercial vehicle insurance. This includes -

• A vehicle’s age, type, and usage; for instance, older vehicles or those assigned heavy-duty tasks usually carry high premiums compared to new cars or those with generic delivery duty.
• Cargo type: Businesses dealing with high-risk or high-value cargo usually carry a high premium.
• The driver’s profile & experience are also deciding factors in deciding the premium. For instance, if the driver has a history of accidents, the premium would be on the higher side.

Tips to lower the premium

• Regular maintenance of the vehicle usually attracts a low premium.
• Implementing proper driving training and enforcing strict safety measures for drivers and workers is crucial.
• If you have several cars operating under your business, consider opting for fleet insurance.

Commercial vehicle insurance claim - Process, documents, & mistakes to avoid

What to do immediately after an accident? Check for injuries and everyone's safety. Next, secure the accident scene and contact the local police authorities. It is recommended to take photos of the damage and accident scene, as it helps with the claim process. Last but not least, call your insurance agent or insurer and inform them about the accident.

What documents are needed to file a claim? Usually, insurers are required to submit the following: a police report, OR/CR, driver’s license, repair estimate, copy of insurance policy, and photo of the damage.

What to avoid when filing a claim? There are a few things you should altogether avoid when filing a claim; this will help you skip rejection. This includes - not filing claims within the insurer’s time limit, submitting incomplete documents, and providing false or misleading information.

Tips for business owners taking commercial vehicle insurance

• Don’t just rely on CTPL; it is mandatory, but not enough.
• Don’t overlook cargo coverage if your business involves the transportation of high-value goods.
• Make sure to read the fine print; it is not a good idea to assume all risks are covered. Do check for policy inclusions and exclusions.

Also Read: Car insurance endorsements simplified: A guide to smarter coverage

Bottom line

For every business owner, the work and everything related to it is highly valuable. The same is the case with the vehicles used for business purposes and profit-making. To maintain a smooth flow of work and operations, it is essential to ensure that vehicles, including cars, trucks, and pickups, are protected against dangers such as accidents, theft, and fire. A solution to all these issues is Commercial Vehicle Insurance.

Vastly different from personal car insurance, commercial insurance offers protection against higher risks, all thanks to its broader coverage. Further, by choosing the right plan, you can not only protect your truck/van but also safeguard the driver, co-passenger, and the cargo. All this ensures Filipino business owners are financially protected, can maintain business continuity, and enjoy peace of mind.

FAQs

Q1. What is a commercial vehicle?
Ans. A commercial vehicle is solely used for business and profit-making purposes. They are usually used to carry goods and passengers from one place to another.

Q2. What type of vehicles are included under commercial vehicle insurance?
Ans. Commercial vehicle insurance includes a wide variety of light, medium, and heavy-duty trucks, vans, and other specialised vehicles used for logistics and cargo transportation.

Q3.What coverage does commercial vehicle insurance offer?
Ans. This particular insurance covers your commercial vehicle against the following: third-party liabilities, fire, flood, riots, strikes, theft, external explosions, accidents, etc.

Q4. I am a logistics business owner. Do I need commercial vehicle insurance?
Ans. Yes, commercial vehicle insurance is essential to keep your business running smoothly. It covers you against losses due to third-party liabilities and several other damages.

Q5. What should I look for in a commercial vehicle insurance provider?
Ans. If you are considering buying commercial vehicle insurance, make sure to go for a reputed provider offering optimum coverage at affordable rates.

Q6. Is commercial vehicle insurance different from private vehicle insurance?
Ans. Yes, commercial vehicle insurance is designed specifically for vehicles used for business purposes. In case of an unfortunate event, such as an accident or mishap, it provides coverage for damages, including the vehicle’s own damage, third-party injury or death, passenger injury or death, third-party property damage, and vehicle theft.

Q7. Does commercial vehicle insurance offer towing services?
Ans. Yes, commercial insurance provides services like towing and minor roadside repairs.

Q8. What factors affect commercial vehicle insurance premiums?
Ans. Several factors affect commercial vehicle insurance premiums in the Philippines, including age of the vehicle, roadworthiness, usage, history of the insured/company, and other portfolio accounts for business considerations.

Q9. How is commercial auto insurance calculated?
Ans. Motor vehicle insurance, including for commercial vehicles, is calculated by multiplying the applicable rate per thousand by the type of usage of the vehicle. The latter should be compliant with the traffic rate prescribed by the IC to the current fair market value of the vehicle. In simple terms, Premium = (Fair Market Value ÷ 1000) X Applicable Tariff Rate.

Q10. What documents are required to file a commercial auto insurance claim in the Philippines?
Ans. While the requirements can vary from one provider to another, generally, you are asked to submit a copy of OR/CR, a copy of the insurance policy, a premium payment Official Receipt, a driver’s license, photos of the damage, a repair estimate, and a valid government ID.

Q11. I want to insure my cargo truck. What are the requirements to buy commercial vehicle insurance?
Ans. Typically, a commercial vehicle applicant needs to submit the following, along with a duly accompanied insurance application form: your driver’s license, a valid Government ID, address proof, a copy of the truck OR/CR and pictures of the unit.

Q12. Does comprehensive truck insurance cover damage against floods and typhoons?
Ans. Yes. Comprehensive truck/auto insurance includes coverage against damages caused to the unit by natural disasters like floods, typhoons, earthquakes, etc.

Q13. Will my commercial auto insurance premium increase if I file a claim?
Ans. No, it's not necessary; it depends on the type of claim you have filed.

Q14. What are the payment options available for commercial vehicle insurance?
Ans. Premium payment options offered differ from insurer to insurer. Some well-known insurers provide monthly, quarterly, and annual plans.

Q15. How long does it take to process a commercial truck insurance claim?
Ans. Insurance providers strive to process claims as swiftly as possible, typically within a few days; however, the processing time depends on the complexity of the claim.

Q16. Are drivers and passengers of a commercial vehicle covered under commercial auto insurance?
Ans. Usually, drivers and passengers are provided coverage in case of an accident under commercial vehicle insurance.

Q17. What if an insured commercial vehicle is used outside of business purposes?
Ans. Commercial vehicle insurance is designed explicitly for units used for business purposes. Therefore, it is recommended to either notify the insurer about the practice and obtain appropriate coverage or cease this practice altogether, as failing to do so may result in lost coverage.

Q18. Where can I get commercial vehicle insurance in the Philippines?
Ans. Many insurance providers offer business auto insurance, some recommended ones being -
AutoMaster by Malayan Insurance, OONA Motor Fleet Insurance, Standard Insurance Truck Protect, SGI Philippines Commercial Insurance, to name a few.

Q19. Is commercial vehicle insurance tax-deductible in the Philippines?
Ans. Yes, the premium paid for commercial vehicles is tax-deductible in the Philippines.

Also Read: Roadside Assistance in the Philippines: What it covers and why you need it