5 Things Your Insurance Agent Failed To Tell You

In the case of insurance, the true value of the product shows when a claim arises. It’s important to inform the client on what he/she should expect when that time comes. Today, I will be discussing the most common problems the insured encounters because they weren’t properly informed by their sales agent.

1. Deductible. It is the fixed amount shouldered by the client for every claim he/she files. It is also commonly referred to as "Participation" or in other countries "Out-of-Pocket". I hear this all the time: “Ang mahal na nga ng binayad naming premium, tapos sa claim, may bayad pa rin?! (We already paid a lot for the policy premium, then we need to pay again for a claim?!)”. For your information, the deductible was mandated by the Insurance Commission. This was implemented to protect the insurance companies from irresponsible filing of claims. Imagine if there were no deductible. A hairline scratch on one body panel could be claimed. That could spell bankruptcy to all insurance institutions. Also, the deductible was put up so the insured would take care of his/her vehicle, drive it defensively, making the world a better place.

2. Depreciation. If your car is older than three years, car parts for replacement are subject to depreciation. This amount is derived from a percentage of the cost of the spare parts.

For example: Your 2009 Toyota Altis ran through a concrete wall and the front bumper needs to be replaced. Since your car is now 4 years old, you will shoulder 30% of the cost of the bumper which is Php 5,000. You’ll need to pay Php 1,500 (30% of 5,000) for depreciation on top of your deductible.

Percentage rate varies depending on the age of the vehicle and the exposure to wear and tear of a car part. Some insurance will waive this depreciation if you will opt to use secondhand parts we call “surplus” or copy parts we refer to as “replacement” parts.

3. Car Accessories. The insurance will only cover the standard parts of your vehicle. Added car accessories are not covered unless they are declared in the policy. Of course, there will be an additional cost on your premium. Examples are: aftermarket magwheels, bumper chins, spare tire covers, etc.

4. Claim Settlements. Claims can be settled through repair, cash settlement, or reimbursement. Most car insurance will have your car repaired at their accredited shop. While others will pay in cash the equivalent amount on a repair estimate. Ask your agent what your options are when settling a claim.

5. Accredited shop. Most vehicle owners have preferred repair shops or suki shops. Unless your insurance settles in cash, it’ll be wise for you to find accredited shops in your area. You can call the insurance company directly and ask for a list of accredited shops.