Question & AnswerQ&A (IC Circular Letter No. 2014-52)
Section 386(f) defines an insurance policy or policy under the CMLVI as a contract of insurance against passenger and third-party liability for death or bodily injuries and damage to property arising from motor vehicle accidents.
Damage to property coverage under the amended RA No. 10607 for CMLVI policies is optional for the policy owner. The law allows the insured to choose to avail of coverage for property damage if offered by the insurer and subject to approved premiums.
Section 387 states that it is unlawful for any land transportation operator or owner of a motor vehicle to operate the vehicle on public highways unless there is a policy of insurance or guaranty in cash or surety bond in force that indemnifies death, bodily injury, and/or damage to property of a third-party or passenger arising from the use of the vehicle.
The CMLVI policy must cover passenger and third-party liabilities for death, bodily injuries, and optionally damage to property arising from motor vehicle accidents.
Presidential Decree No. 1814 deleted the coverage of damage to property from the CMLVI, removing property damage as part of compulsory insurance coverage at that time.
It is unlawful to operate any land transportation vehicle on public highways without an insurance policy or guaranty that indemnifies third-party death, bodily injury, and/or damage to property, and violation may attract penalties as prescribed by law or regulatory authorities.
The use of the disjunctive 'or' in Section 387 indicates a choice among alternatives, meaning the policy owner may choose to include damage to property coverage or exclude it, making property damage coverage optional.
Before RA No. 10607, Presidential Decree No. 612 was the main governing law on Compulsory Motor Vehicle Liability Insurance (CMLVI).
Any land transportation operator or owner of a motor vehicle who operates on public highways must secure the CMLVI policy or a guaranty in cash or surety bond.
The insured may choose to include damage to property coverage if the insurer offers it and the insured pays the corresponding approved premiums, but it is not mandatory under RA No. 10607.