Motor insurance in Hong Kong is viewed by many as a near commodity. All drivers and owners of vehicles are required by law to be covered by at least third-party insurance with many also securing comprehensive plans. The problem is, while there are laws around minimum levels of coverage, not all plans are equal. In fact, there is such a wide variety of plans, all with different terms and conditions, which explains why it is common to see Hong Kong car insurance myths arise. Last year, we took a look at 8 motor myths, here we clear the air on 5 more.
Your premiums will always decrease the longer you have your insurance
Many car insurance plans in Hong Kong offer a No Claims Discount (NCD) which sees a discount applied to your premium for each year you drive without an accident or claim. With up to a 60% discount available, this is a popular feature demanded by many drivers in Hong Kong. This has perpetuated a bit of a belief that your premium will decrease the longer you have your plan.
The thing is, this is not always the case. First off, if your plan does not offer a NCD then it is a near sure thing that your premiums will likely increase each year. Secondly, the NCD is offered to drivers who have not made a claim. If you have been in an accident and submitted a claim there is a good chance you might see your premium actually increase.
Interestingly, we are aware of some insurers in Hong Kong who offer a NCD but have a habit of actually increasing premiums of those with the discount higher than drivers without. This underhanded tactic, while uncommon, could result in you seeing premium increases despite your discount.
It is, therefore, important to talk with an advisor at Kwiksure. Because we work with a variety of insurers our advisors are well aware of the underhanded tactics used by some insurers in Hong Kong and can help you avoid them.
When you reach 25 or drive for a set amount of time your insurance will go down
In many countries, including Hong Kong, new and young drivers will often pay higher premiums for their car insurance. The main reason for this is because there is a higher chance that younger drivers (both in experience and age) will be in an accident. Generally speaking, there is a belief that when you reach a specific age, usually 25, your insurance premiums will automatically decrease. The same can be said for new drivers: After a certain number of years, you can be deemed a more experienced driver and eligible for cheaper premiums. This is not always completely true.
When it comes to young drivers insurers will generally charge higher rates, and once an age threshold is passed will usually reduce premiums as long as there is a clean driving record and claims history. In many cases, the age at which an insurer will start to offer lower premiums is 25. However, there is not a legally mandated age at which this must happen.
This means that some insurers will not actually automatically reduce your premiums when you turn 25. Some might reduce it before you reach this age, while some will reduce it after. Others will need to be asked if they will actually do this.
Insurers don't just charge higher premiums to young drivers however, they will also usually charge you more if you have fewer than 2-4 years of driving experience. In fact, many insurers will combine this with your age when calculating what you will pay for car insurance.
For example, if you are 24 with no driving experience, you will pay a higher premium than a 24-year-old with 2 years driving experience. This means that once you reach a certain age you might not see an automatic decrease in premiums.
The more costly the car, the higher the insurance
This is an interesting myth as it is largely based on a general truth: Cars with a higher price tag will see generally higher premiums than cheaper vehicles. This is not always true, however.
When insurers go to develop a car insurance premium they will look at a variety of information including the type of vehicle and your driving history. They will also look at historical data for your car's make and model.
If they see that your model of car has a statistically higher number of accidents and claims you will likely see a higher premium quoted. In some cases, a cheaper vehicle will have much higher premiums than a relatively more expensive one.
The interesting thing here, is these figures are usually developed based on the insurer’s historical data. There is no central database for this, so you might find cheaper premiums with different insurers.
You can only shop for insurance when your plan is up for renewal
Unlike some of the other myths discussed, this one is 100% untrue. You are free to shop around for new car insurance whenever you feel like. In fact, it's encouraged by many experts to actually do so on a fairly regular basis as insurers are constantly adjusting their rates.
The one important thing to be aware of here is how you pay for your insurance. If you pay your premium all at once for the year then switching insurers half way through the term will usually result in a loss of whatever money you have spent - insurers are under no obligation to refund your money should you decide to switch providers mid-term.
Our recommendation is to start looking at your coverage options 1-3 or so months before your current plan's end of coverage date. This can help you lock down some options and see whether you are still paying the best rate possible.
Going with the insurer directly is cheaper
Often, it is cheaper to buy directly from a manufacturer or service provider than going through an intermediary. When it comes to car insurance, however, you will find a variety of premiums offered by insurers. This means that you will need to shop around with different insurers when looking for coverage.
Of course, comparing plans by yourself can be a time-consuming endeavor, and it can be hard to tell whether the cheap plan you are considering is actually going to be a good plan.
One of the best ways to ensure you get the best car insurance coverage at an affordable rate is to work with an advisor at Kwiksure. We can help you compare the different plans on the market and identify the best one for you.
Contact us today to learn about how we can help you.