Here’s What You Should Know About the Synchronization of Your Vehicle Insurance Coverage and Its Registration Date3 min read
To protect the public while on the road, the Land Transportation Office (LTO) requires motor vehicle owners and operators to get compulsory third-party liability insurance (CTPL) policy, regardless if they’re using their vehicles for personal or commercial use.
To those unfamiliar, a CTPL plan is a minimum coverage that the law mandates. It ensures that the victim gets proper medical care or their family receives compensation in case the policyholder caused an accident that led to injuries or death.
Owners can acquire a standalone CTPL policy, but those who want to mitigate more risks may secure a comprehensive insurance plan that may or may not include CTPL coverage. But while getting a comprehensive policy with CTPL coverage seems like the most ideal protection plan for owners and operators, this has also become a source of headache for many of them.
This is because the LTO refused to honor some comprehensive policies that already cover CTPL if the CTPL coverage does not coincide with the date of vehicle registration. Owners were then forced to get standalone CTPL insurance on top of their comprehensive plans that already cover CTPL. This move caused a lot of confusion, stirring up public opinion.
How did they resolve the problem?
To address this redundancy concern, the Insurance Commission (IC) released Circular Letter (CL) No. 2021-54 in 2021. The CL requires insurance companies to synchronize the period covered by comprehensive insurance policies with the month of registration of covered vehicles.
The following are some of the most commonly asked questions regarding this order and the answers the IC has provided in the letters they released:
- How does this order affect the current practice when acquiring insurance?
Currently, CTPL coverage expires on the first day of the month following the registration month. For example, a vehicle registered in February has a plate number of 2, and its CTPL’s coverage period should be from March 1 (12:00 noon) to March 1 (12:00 noon) of the following year.
This practice will remain the same. However, insurers are now required to ask for the plate number or OR/CR of vehicles so they can issue the correct CTPL policy that will be coterminous with the vehicle registration. They will then issue a COC that must be presented to the LTO when registering.
- How should the adjustment be made for vehicles that don’t have synchronized registration dates and CTPL?
Let’s say you have a brand-new car renewable after three years and have an assigned plate ending in 5. You have a CTPL policy that expires in September.
In this scenario, the IC recommends that in the third year, the policy should be extended to June 1 if the month of registration is May. From then on, your insurer should issue a policy that is effective June 1.
From the September expiry date, you will be issued CTPL coverage up to June 1, and your insurance premium is pro-rated.
According to the IC, “this is acceptable even if the coverage is not a one-year period.” However, you should show to the LTO your previous policy with September expiration and the additional COC extending the coverage up to June 1.
- How would I know if my coverage period should be adjusted?
The insurance companies and their agents should inform you that your coverage period may be extended. They should also educate you about the terms of the extension.
- Does this change what type of insurance policy I must secure?
No. You can still procure any of the following:
- Standalone CTPL policy
- Comprehensive insurance policy with CTPL
- Comprehensive insurance policy (provided that you already have existing CTPL with a coverage period that coincides with your vehicle’s registration date)
- Are all insurance companies required to follow the CL?
Yes. Insurers that fail to comply shall receive a fine amounting to P5,000 for each violation.
If you have any more questions or clarifications regarding the CL, check out the actual document here.