In Hong Kong, as well as virtually everywhere else in the world, insurers offer a wide range of insurance policies and features that help protect policyholders' vehicles or their car insurance discounts even further. One of them is a car accident forgiveness policy. But, what exactly is it, and can you get it in Hong Kong? What are the pros and cons of obtaining a car accident forgiveness policy, and is there a catch? Answers to these and other car accident forgiveness policy questions can be found within today’s article.
What is a car accident forgiveness policy?
A car accident forgiveness policy is an additional level of protection available in comprehensive car insurance policies. It means that the insurer will “forgive” the first accident that was caused by your fault. The goal of a car accident forgiveness policy is to protect you from a car insurance premium increase due to the first car accident you have caused. With a car accident forgiveness policy, you can keep your NCD (No Claims Discount) during your renewal with the same insurer.
How does a No Claims Discount work?
A No Claims Discount is a premium discount offered to policyholders for not submitting any claims during a one-year policy term. For private car insurance in Hong Kong, the No Claims Discount is applied through an increasing percentage scale, usually by 10% each year. Most providers offer a minimum 20% discount after the 1st year and a maximum of 60% discount, which equates to 5 continuous years without any claims made by the policyholder.
Since the maximum 60% discount on motor insurance premiums is a considerable saving, many Kwiksure clients choose to protect it with a car accident insurance policy.
Can I get car accident forgiveness policy in Hong Kong?
Yes, you can buy a car accident forgiveness policy in Hong Kong, but you will most likely find it under another name: No Claims Discount (NCD) protection. The way NCD protection works is very similar to a car accident forgiveness policy with the difference being that, in Hong Kong, protection is not limited to the first accident, but rather to a threshold limit that must not exceed the designated amount set in the policy agreement.
The pros and cons of car insurance forgiveness
Since NCD protection is an additional feature to your comprehensive car insurance, each car insurance company has its own terms and procedures for accident forgiveness. Of course, the higher the NCD protection amount threshold, the higher your car insurance premium will be in total. So when is it a good idea to protect your No Claims Discount, and when should you skip it?
Pros of NCD Protection plans
Obtaining the extra NCD protection makes sense in two instances: either for a young driver (or you added a young driver as a 2nd named driver to your policy) so he or she can accumulate the NCD discount over the years, or for an already safe driver with five or six years of accumulated NCD.
If your total claim amount doesn’t exceed the agreed threshold amount in the policy, you will be entitled to the same NCD under the existing policy upon renewal. However, if your car accident insurance claim exceeds the agreed amount, you will lose one year's worth of accumulated NCDs.
Cons of NCD Protection plans
First of all, you must remember that even though your current insurer doesn't count the accident (up to the threshold value) in calculating your premiums, the accident is still in your driving record. If you choose to change the insurer, the NCD protection from the previous one might not be honored by the new policy.
Another point to note is that NCD protection plans do not guarantee that the insurer will continue to insure you. If you have a record of several accidents and your current insurer finds you unprofitable to insure, a new one will most likely charge higher premiums based on your driving record.
Looking for extra NCD protection?
Whether you are looking to protect your accumulated No Claim Discounts, or need general motor insurance advice, feel free to reach out to the team at Kwiksure. As an insurance brokerage firm, Kwiksure can help you to obtain the cheapest motor insurance and advise on whether getting a car accident forgiveness policy is the right choice for you.
Contact us today for a free quote, plan comparison, and car insurance advice!