Motor Insurance is designed to cover loss or damage to your car and that of third parties. The loss can be a result of having to repair your car following an accident for example, or paying compensation to a third party for the property damage, bodily injury or death. However, coverage varies according to the policies.
Do you need motor insurance?
Under the Motor Vehicles Insurance (Third Party Risks) Ordinance, it is compulsory to take out insurance with an authorised insurer to cover your liabilities for injury or death of third parties arising out of the use of your motor vehicle.
There are four different types of insurance policies available in Hong Kong:
- Act Only: The minimum coverage that a car owner must purchase. It covers only the minimum legal requirements for third party death and bodily injury
- Third Party Liabilities Only: Covers claims for loss or damage to the property of a third party, or the bodily injuries or death of the third party. Third party liabilities insurance also helps with legal fees should they arise.
- Third Party, Fire and Theft: Covers loss or damage to your own vehicle if it is involved in a traffic accident, fire or theft, in additional to the Third Party Liabilities Only policy. Some policies may allow you to claim for towing costs incurred because of an accident as well.
- Comprehensive: Covers any accidental loss or damage to your car in addition to the above.
|Type||Third party liabilities||Damage or loss caused by theft of your car||Damage to your car|
|Injuries or death to third parties in an accident||Damage to third parties' property (eg their cars)|
|Third Party Only|
|Third Party, Fire and theft|
Your motor insurance premium is calculated in accordance with a set of data include your age, occupation, driving experience, the type of policy you choose, the type and valuation of your vehicle, as well as your past claim history and traffic conviction records.
Always remember to tell the truth when you are applying for a motor insurance policy. Give all the facts about your driving history, your vehicle and who will be driving it.
Driving safely, as well as the installation of security devices to your car and parking in a secure area, may actually help lower your premium payments over time.
A particular feature of motor insurance is the No Claims Discount (NCD). It gives you a percentage discount on your motor insurance premium for each additional year if you fulfill the specified conditions. The eligibility of NCD may differ from insurer to insurer.
Most motor insurance policies have an excess, which is the initial amount of any claim that you must meet yourself. The amount of excess may vary depending on types of claims, whether the accident is caused by a named or unnamed driver. Besides unnamed driver excesses, young and inexperienced driver excesses are common excesses. 'Young driver' usually refers to drivers under 25 years of age, while 'inexperienced driver' refers to drivers who have held a driving licence for less than 2 years. You may be able to obtain a lower insurance premium with a higher excess, but be sure you can afford to pay the excess if you need to.
As with all insurance policies, motor insurance policies have exclusions for which the insurance will not pay a claim generally. Always check your policy carefully. Common exclusions include use of vehicles outside the specified geographical area, damage caused because a driver was unlicensed, drunk or under the influence of drugs.
Special information for young drivers
Many insurers specify the minimum age requirement of the policyholder, as well as the age of the 'named driver' on the policy. The minimum age is normally 25. You can still apply for a motor insurance policy if you are under 25, but the selection of insurers is more limited and you may have to pay additional excess when making a claim. The same can be applied to 'inexperienced driver' who has less than two years of driving experience.