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Most people think car insurance is a necessary evil—another add-on to the growing mountain of fuel and car maintenance bills. In fact, ever since the Land Transportation Office (LTO) mandated Third Party Liability or TPL for all vehicles, most see it as nothing more than a requirement for car registration. However, this line of thinking has got to change. Imagine driving along EDSA at half past midnight when a 10-wheeler truck suddenly losses its brakes and rear ends your car. Imagine that after a night’s worth of partying, you suddenly find your car missing from the parking lot you left it in. It is times like these that you’ll be glad you took the time to purchase a good car insurance program.

The stigma attached to car insurance is mostly down to the uneducated buyer. Most car buyers, fall victim into buying either the cheapest car insurance or whatever the car dealer offers without even looking at the policy itself. Car buyers such as yourself take the time to check out how many horsepower this car has or how many cup holders that SUV has, so you should also make it a habit to find out what kind of protection that insurance provides the moment you leave the showroom floor. A good car insurance is like an immunization against the perils of driving around the city. Here are some things you should be aware of before you sign on that dotted line.

1. Shop Around For a Dependable Provider

It’s all over the news—the global financial crisis has hit not just in the United States, but even in the Philippines as well. Because of this, more than ever before, you have to take extra care in picking a dependable car insurance company. Good financial strength is key to any car insurance provider or else you may face difficulty when it comes to claiming a pay out. And remember, the financial stability of an insurance company has nothing to do with how they treat their customers. Though, certainly excellent customer support is an added perk.

For the general consumer, well-known insurance providers are going to be the safest bet. Moreover, most car dealers will unlikely recommend a company with dubious financial standing. Still, if you’re considering a smaller or unfamiliar insurance carrier; take the time to research on them. Ask for brochures, browse their corporate website, read the newspapers, ask your friends, Google it—knowledge about the insurance company’s background and financial standing is very important.

A way to say is to go through an independent insurance agent, also known as a broker. Compared to a captive agent who represents a particular insurance company, a broker will not have the tendency to have vested interested in selling you a policy from one particular company.

2. Some Important Things to Remember

The most important thing to remember is that you can always choose to start or terminate your car insurance policy at any given time. This is especially true when you’re selling the car or switching insurance providers. However, make sure that there’s no gap in your insurance coverage when you use your vehicle. The last thing you need is to get into an accident uninsured during an “insurance gap”. If you’re switching to another insurance company, make sure to notify your insurer that you want to cancel your policy and give an effective date, or else they may continue to bill you for insurance you don’t use. This won’t do wonders with your credit history, especially if you’re going back to that insurance provider in the future.

If you’re happy with your current insurer though, take the time to look and review your policy. Here’s a quick rundown of the terminology that you may come across:

• Actual Cash Value – the cost to replace property minus the amount it has depreciated since the original purchase date.
• Benefit – the amount the insurance company pays to you or your beneficiary when you file a claim.
• Bodily Injury Liability – this covers medical expenses for injuries you cause to someone else, say your passenger.
• Claim – the policyholder’s request for the reimbursement of a loss covered by their insurance policy.
• Collision – this covers damage to your car from any collision. This could be collision with another car, parking curb, light post, etc.
• Comprehensive – for damage to your car that doesn’t involve hitting another car. Depending on car insurance company, this may cover events from fire, theft, falling objects, explosions, etc.
• Deductible – the portion of losses that you agree to pay in the event of an accident. Higher deductibles may lower your insurance premiums, but it will come haunting you in case of an accident, especially if you’re at fault.
• Third Party Liability – a requirement during car registration renewal, this is to pay for treatment and/or property damages caused by the policyholder in the event he has injured or damaged someone else’s property especially an uninsured person.

3. Insurance Depends on Vehicle, So Adjust Accordingly

The number of vehicle choices in the market is certainly staggering, but there’s one that is perfectly suited to your needs and budget. The same is true for a car insurance policy. Before going for that car insurance, make sure that it’s suited to your needs. For example, if you plan to use your car for competitive racing, a typical insurance policy isn’t what you’re looking for. Instead, look for one that specifically includes a clause that allows you to use your vehicle on the race track. The same is true for those who use their vehicles for livelihood purposes, especially if you’re regularly transporting hazardous chemicals or items like gasoline.

Often, the most overlooked aspect of a car insurance policy (and usually the starting point of headaches) is the classification of sport utility vehicles as commercial vehicles. Though they’re just as affordable to ensure as a passenger car, more often than not, they have much higher deductibles—sometimes double than that of a car! So repair cost estimates that may be otherwise covered by a passenger car’s insurance won’t be covered in a SUV’s. Also, check out how many passengers are covered by the “Bodily Injury Liability” aspect of your insurance. Often, even if your car can fit 10 people, insurance will only cover five. As a rule of thumb, always insist on coverage for the maximum people your vehicle can carry.

Treating older vehicles with a TPL-only insurance may save you money, but you’ll regret it if something happens. For older cars, reimbursement for damage isn’t the most attractive aspect, especially since your car’s depreciation is taken you. However, when it comes to being stolen, keeping a comprehensive policy keeps you safest. Thinking that your old clunker is safer than a shiny new model or that a luxury car is more attractive to thieves than a less expensive model is wrong. Older vehicles are usually stolen for parts which are no longer being manufactured; newer cars are stolen for their popularity. In any case, having your car continually insured is protection against unwelcome incidences.

In the case your car does get stolen, notify the police immediately. Speed is essential to recovering stolen cars, since any delay means your car is more likely to be chopped up or driven out of town. Aside from knowing the make, model and plate number of your car, you should also keep a copy of its registration with you. Never leave the original registration and insurance papers in the car.

Getting stuck in the middle of nowhere at ungodly hours is the nightmare of just about any driver. So, go for a car insurance provider that offers a dependable 24-hour towing and roadside assistance. In the United States, some insurance companies even offer loaner vehicles so that you can continue on your journey. This still isn’t heard of in the Philippines, but hopefully local insurance companies will jump to provide this additional benefit.

4. You and Your Casa

When you’re purchasing a new vehicle, it’s your right to opt against taking the bundled insurance that comes with the car. This is especially true if you like the insurance provider you’re using. This move will most certainly delay the car purchase, but it can save you a couple thousand pesos or so. However, if you do take this route, ask your sales agent if your car insurer is affiliated with them. If not, you can always opt for choices especially if you’re not comfortable with the one they’re bundling with your car. If he or she is coy about with insurer they’d recommend, head over to the insurance claims or body repairs manager and ask them their opinion. They will know which car insurance companies have the smoothest claim processes. This will affect how quickly your damaged vehicle would be completed.

When your vehicle does get damaged, it’s your right to insist on how a particular repair is to be done. For example, if there’s extensive damage to say, the bumper of your car, you can opt to have it replaced rather than re-shaped. Aside from visible damage, also make sure to check for damage to underchassis items like engine and suspension parts. Insist in having them replaced or repaired as well, especially since your future safety is concerned. Also ask for a second opinion (usually with the casa’s repair estimator) if you don’t trust how your car insurance provider will approach a particular repair job. Insist for proof to the repairs done as well.

5. Review the Policy Before You Sign

Most car owners generally know what kind of car insurance he has—third-party liability or comprehensive. However, when it comes to the fine print, there are terms about which most would have absolutely no clue on (but are sure to surface when it comes for your insurance to shell out cash to repair your damaged vehicle). So in order to make sure you’re dealt with a fair hand, know your policy.

Sit down with your insurance agent and review your policy. Make sure everything that you talked and agreed about are clearly stated in the policy. If you don’t understand any of the terminology, don’t be afraid to ask. Find out what’s covered by your policy and what’s not. It’s better to look dumb now rather than after an accident.