Understanding the Coverage: What is Third Party Liability Insurance?

Third Party Liability Insurance (or plainly TPL) is a commonly confused term in car insurance because it is a general and broad term. To be specific, it can mean any of two things: CTPL Insurance or VTPL Insurance.

CTPL Insurance or Compulsory Third Party Liability Insurance is the mandatory insurance plan you need before car registration with the LTO, and it only covers injuries/damages caused to a third-party vehicle and its passengers up to a certain amount. In this GoBear Guide, we’ll talk more about third party liability insurance as VTPL Car Insurance, which provides a higher coverage for third-party liability and is included under a comprehensive car insurance plan.

For the purpose of discussion, third party liability insurance is sometimes called VTPL insurance, excess liability insurance and excess casualty insurance. More car insurance companies use the term “VTPL.”

To help you understand this coverage better, here’s a scenario: Juan got into a vehicular accident, which may or may not be his fault. As a result, another vehicle ( which we will call a “third-party”) was wrecked and a passenger of that third-party vehicle fractured her arm in the process.

If you’re the one responsible for the accident, the right thing to do would be to shoulder the damages caused by the wreck – both damages to the person and to the vehicle. The mandatory CTPL may cover the amount necessary to discharge you from liability, but it is only capped at ₱100,000, and it only covers injuries/death of the third-party passenger. The excess liability insurance kicks in when you already exhaust the limits of CPTL for injury related issues. In addition to injury to third-party passengers, a VTPL car insurance covers the damages made to the third-party vehicle as well as properties damaged as a result of the accident.

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VTPL Insurance have two underlying benefits

There are coverage benefits of third party liability insurance or VTPL Insurance and they come as a package when buying comprehensive car insurance:

1. VTPL Insurance for bodily injury

This coverage insures a third party for death and/or bodily injury. The excess casualty insurance for bodily injury covers hospital rooms, surgical expenses, and medical fees, among others.

2. VTPL Insurance for property damage

While the CPTL does not cover property damages, the third party liability insurance for property damage ensures that the third party’s car and other property damages will be covered, up to a certain amount.

Excess liability car insurance quotes: How much is this coverage?

The premium you pay for the coverage and how much the insurance company will pay in case of claims will almost always depend on your car make, model and its *fair market value (FMV). To have a better idea of car insurance quotes for VTPL car insurance, let's assume a base case: you have a Toyota Vios 2013 model E 1.3 gas-fueled with automatic transmission, and you are still paying for your car loan. Currently (Year 2016), the car is worth P450,000.

Comprehensive car insurance from QBE Seaboard

If your car is still mortgaged, then a VTPL car insurance is required when buying a comprehensive car insurance. Assuming the base case mentioned above,

*Fair market value is how much your car is currently priced in the market at the time of assessment. If you have a newly-bought car (less than 1 year), then the car's FMV is equal to how much you bought the car for. Take note that car value depreciates by about 10% every year.

Insurance claims: How do I make an excess liability insurance claim?

The process and requirements for making an excess liability insurance claim varies per insurance company. Below are common requirements and procedures amongst insurance companies. Note that this is only an overview as some insurance companies have additional requirements and procedures.

What are the requirements needed to make a third party liability insurance claim?

Here are the basic requirements in filing a third party liability insurance claim with a Filipino insurance company:

1. Copy of your excess liability insurance policy and official receipt of premium payment

2. Police report

3. Photo of the damaged part with the car’s license plate

4. Photo of the whole car with license

5. Notarized affidavit from the insurance company, including a written declaration of the sequence of event

6. Repair estimate

7. In case of bodily damage: a copy of medical certificate and receipts, copy of Marriage certificate (if applicable), a copy of Birth certificate, and certificate of employment

8. In case of death: certified copy of death certificate, and funeral bills

Process: How to make a claim for third party bodily injury/death

1. First aid is a must. Before anything else, get medical attention.

2. Call the police. Once they arrive, they would take note of all the details of the accident.

3. Once the third party is taken to the hospital and the details are recorded by the police, you must go to the station and collect all necessary documents. Under a VTPL car insurance, this gives you certain ammunition in case the third party and his/her family decide to file a lawsuit against you.

4. Expect to get a claim letter from the third party enumerating their demands. In case there is none, be a good person and ask what their demands are. Settle the issue calmly.

5. Call your third party liability insurance provider and ask for a representative to help you in organizing all the needed documents such as medical certificate, prescription bills, and hospital expenses.

6. The insurance company will take care of the reimbursement, up to the limit of your coverage.

Process: How to make a claim for third party car and property damage

1. Contact your car insurance provider and ask for advice on how to best handle the situation.

2. Request for a representative from the third party liability insurance company to come to the site and inspect the scene.

3. Take photos of all cars involved, making sure to capture: the damaged part, the whole car, and the license plate. You can also capture the whole scene in general.

4. Call the police to help record and analyze the situation. The police can help you and the third party determine who is at fault.

5. The third party must file the claim and provide necessary documents to support the claim under the VTPL car insurance. He or she must also secure a police report that states that the insured (you) has agreed to cover the damages.

6. Have the authorized repair shop give you an estimate of the total repair cost for the damage. Forward the estimate to your insurance company for processing.

7. Once the insurance company has processed the Letter of Authority (LOA), you must pay for the deductible in order for the repairs to start.

Compare third party liability insurance online: Why choose GoBear?

With various car insurance companies offering excess liability insurance, how do you find the right one for your budget and needs? GoBear provides a free, simple, and unbiased way for you to compare third party liability insurance products online, so you can make the best decision. Learn more about how GoBear can help save you time and money with your insurance by checking out our FAQ page.