3-Year Compulsory 3rd Party Liability Insurance

Section 376 requires the Land Transportation Office (LTO) to not allow the registration or renewal of registration of any motor vehicle unless the land transportation operator or motor vehicle owner presents and files substantiating documentation (in a form approved by the Commissioner) evidencing that the required insurance policy or guaranty in cash or surety bond is in effect.
Section 226 prohibits issuing or delivering any insurance policy, certificate, or contract within the Philippines unless in a form previously approved by the Commissioner.
Section 226 further prohibits using an application form, or attaching or employing any rider, clause, warranty, or endorsement, unless the form of the rider, clause, warranty, or endorsement is approved by the Commissioner.
Section 375 directs the Commissioner to furnish the Bureau of Land Transportation (now LTO) with a list of insurance companies authorized to issue the insurance policy or surety bond required for motor vehicles.

The circular mandates the move to 3-Year CTPL issuance in connection with motor vehicle registration reforms.
The circular requires a system of mandatory insurance coverage that ensures the public obtains appropriate insurance coverage for vehicle registration.
The circular requires elimination or minimization of irregularities associated with CTPL issuance and processing, including the proliferation of fraudulent policies and unpaid claims.
The circular is intended to repair serious damage in the confidence of the Filipino public in the integrity of CTPL coverage obtained for purposes of registering motor vehicles.

The 3-Year CTPL policy applies in place of the traditional 1-Year CTPL previously required for initial registration of all brand new motor vehicles.
The Insurance Commission’s implementation is tied to the statutory gatekeeping that the LTO must require presentation and filing of approved substantiating documentation before allowing registration or renewal.
The circular directs that CTPL coverage and its issuance system be structured so that vehicle registration requirements are satisfied while irregularities in CTPL coverage are eliminated or minimized.

Non-life insurance companies are directed to commence issuance of 3-Year CTPL policies not earlier than May 2, 2005.
All forms for 3-Year CTPL coverage must be separate and distinct from comprehensive motor vehicle policies.
Separate and distinct 3-Year CTPL coverage forms must be submitted to the Insurance Commission and must be duly approved by the Insurance Commissioner.
Insurance companies duly accredited by the Insurance Commission must be pooled under the auspices of the Philippine Insurers & Reinsurers Association (PIRA) to provide the insurance coverage for the 3-Year CTPL.

The Insurance Commission must implement, and in cooperation with PIRA must provide, a system of mandatory insurance coverage required for vehicle registration.
The system must ensure that the public obtains the appropriate CTPL coverage at the time of vehicle registration.
The system must eliminate or minimize irregularities associated with CTPL issuance, including fraudulent policies and unpaid claims.
The cooperative implementation with PIRA is required to achieve the stated integrity and confidence objectives for CTPL coverage.

CTPL policy issuance must comply with Section 226, requiring that policies, certificates, and contracts issued or delivered within the Philippines use forms previously approved by the Commissioner.
CTPL documentation presented to the LTO for registration or renewal must comply with Section 376, using a form approved by the Commissioner evidencing that the required insurance policy or guaranty is in effect.
The Commissioner must furnish the LTO with a list of authorized insurance companies permitted to issue the CTPL policy or surety bond required under the motor vehicle insurance framework.

IC Circular Letter No. 10-2005 supersedes any and all circulars on the same subject.