These top 6 car insurance exclusion clauses offer no compensation

【汽車保險】六種除外責任條款無得賠

Running a car in Hong Kong can be costly. It's expensive enough to buy a car on its own. Afterwards, you still have to pay for at least third-party car insurance as mandated by Hong Kong law. However, did you know that car insurance is just like any other type of insurance in that there are certain exclusion clauses? Once violated, your insurance company will not compensate you for your losses. To protect themselves from reckless, irresponsible drivers, insurers have set up these terms. This week at Kwiksure, we'll take a look at how to find insurance exclusion clauses on your policy document. We'll also run down a list of the top six most common car insurance exclusions. 

Where does it say that my car insurance plan can be revoked?

Your car insurance policy document clearly states the coverage area and exclusion clauses. Also, it includes possible reasons for claim denial. Similar to a contract or agreement, your policy document lists out the rights and responsibilities of both buyer and seller. Your insurer agrees to accept your claims so long as you agree to follow their terms and conditions in the policy agreement. This lowers or limits the risks for insurers in fulfilling claims.

What happens if I violate the terms of my insurance policy?

Acting against the agreement of both parties could be seen as violating the policy terms. While insurers may differ in their terms and conditions, all policy term violations have severe repercussions. Most importantly, this will invalidate your insurance plan. Basically, your vehicle will no longer be insured against accidents. In addition, you will be unable to drive legally on the roads of Hong Kong. 

Last but not least, you'll be fully responsible for any losses incurred by a third party in a traffic accident. Without valid insurance, you must pay completely out-of-pocket if you're responsible for the accident. Imagine having to pay for the third party's losses and then your own car repair fees. 

Under what situations will my insurance expire?

Your insurance policy clearly states that your plan can be revoked. Though each insurance company has a different set of regulations, there are situations commonly viewed as policy violations across the industry. Below are the most common reasons for insurance revocation:

1. Failure to disclose all information and/or making false statements

When you intentionally keep important information to yourself or make false claims when buying a policy, your insurer has the right to refuse compensation. For instance, if you haven't revealed that you regularly transport heavy goods with your vehicle, or you lie about where you've parked your car. Another example would be if you haven't disclosed the person who usually drives your car.

2. Modifications to the vehicle without notifying the insurance company

In Hong Kong, vehicle modification is heavily regulated. Undeclared modified vehicles may be viewed as a violation of insurance regulations. After modification, any changes in car performance or value will affect the status of your car insurance. An example would be using bald tires without tread. In the worst-case scenario, your plan may no longer be suitable. To avoid potential trouble, consult your insurer before your vehicle undergoes any modification.

After buying insurance, if you install additional car parts but don't inform your insurer, then when you file a claim, you could only receive the equivalent amount of compensation for your new car part. Moreover, this would be the cost after depreciation. Since the majority of car upgrades are a lot more costly than replacement parts, you'll suffer a greater loss.

Continue reading: Your guide to aftermarket vehicle modifications in Hong Kong

3. Driving under the influence of alcohol or drugs

Not only is driving under the influence illegal, but it'll also invalidate your car insurance. Some insurance companies clearly state this on their policy documents. However, others only include a vague disclaimer on the agreement, such as "if the policyholder commits any crime while driving their vehicle, their plan will be revoked".

Note that if you cause bodily harm to a third party while drunk driving, your insurance company theoretically does not need to make a compensation based on this exclusion. However, since the policyholder injured, or even killed, the third party (the third party's property loss is not included in this limitation), according to the Insurer's Concerned Principle in the Domestic Agreement issued by the Motor Insurers' Bureau of Hong Kong (MIB), insurers may still be liable. Nonetheless, they can still receive reimbursement from the policyholder for the third party's medical fees through civil claims and other channels afterward.

4. Renting out your private car to drive passengers

Without a proper license or insurance, it's illegal to rent out a vehicle for commercial purposes in Hong Kong. This is also why Uber is controversial in Hong Kong. If you only have private car insurance, you cannot use the car for commercial purposes. In addition, taking passengers for remuneration can revoke your private car insurance. This leaves you and your passengers inadequately protected.

5. Driving without a license

Is your driver's license suspended or revoked? Perhaps you let someone without a valid driver's license drive your vehicle? In this case, your insurance company has the right to revoke your car insurance. This makes sense because a driver who does not possess a driver's license, or has had theirs suspended or revoked, is considered incapable of driving safely on the road. In addition, you may also be charged by the police for "driving without third-party insurance". Even if you are not the driver at the time, you will also get into trouble.

6. Driving your vehicle outside of the designated areas

Except for life insurance and international medical insurance, most insurances have geographical restrictions. That's why most car insurance purchased in Hong Kong only applies to Hong Kong. Although some comprehensive car insurance and third-party liability insurance do provide cover for car rental, which is handy when you rent a car overseas to go on a self-driving tour. Nevertheless, we still recommend purchasing additional insurance here.

Planning to head up north via the Hong Kong-Zhuhai-Macao Bridge (HZMB)? Get to know the cross-border car insurance requirements.

Contact Kwiksure for your insurance solutions

After getting to know the six most common car insurance exclusions, the next step is to find a suitable insurance plan for your car.

Kwiksure has more than 20 years of experience in the car insurance industry. Aside from car insurance (third-party and comprehensive), we also provide home insurance, motorcycle insurance, Voluntary Health Insurance Scheme (VHIS), HZMB insurance, and many more. Get a free quote nowwith our online quotation tool! Alternatively, contact our team of insurance expert advisors to learn more about Kwiksure's car insurance plans!