Commercial accidents and private property: who pays for the damage?

Key to keeping a business running is having the right insurance to cover you when the unexpected happens. If vehicles are an integral part of your business, then having commercial vehicle insurance is a must. Commercial accidents can leave your company liable for thousands, if not potentially millions, in private property damage; often pushing many unprepared businesses to the brink of liquidation. This week, Kwiksure discusses who might be liable for what in the event of a commercial accident.

What is commercial vehicle insurance?

As we’ve discussed before, commercial policies, while largely similar to private car insurance plans, offer slightly adjusted benefits and limits in order to account for the nature in which the vehicle is being used for. With the two main types of commercial vehicle plans in Hong Kong you can expect that:

• Third Party commercial insurance plans: Will cover at least HKD 100,000,000 against liabilities for third-party (not the driver) injury or death, as well as property damage.
• Comprehensive commercial policies: Will cover damage incurred by the commercial vehicle itself in the course of its duties.

Types of commercial accidents

Commercial accidents are no different to those involving private vehicles, the only difference for the purpose of our discussion is that commercially owned and operated vehicles are involved. Hong Kong news will have some significant accidents featured in their headlines from time-to-time, and some of these highlight some of the scenarios we’ll discuss today in relation to commercial vehicle insurance:

• Commercial accidents involving other vehicles: Such as the case of a Hong Kong bus that crashed into a police vehicle and a private car.
• Commercial accidents involving property: Including a recent case of a crane driver that mangled a public walkway after driving with the crane still extended.
• Commercial accidents resulting in injury or death: Like the tragic news of three taxis, a truck, and a private car crashing on Lantau Island, leaving one taxi driver dead.

In all of these cases, like all accidents, who pays for what will depend on who is found to be at fault. Sometimes it can be black and white: Car A crashed into Car B, so Car A’s insurance pays. In other cases, it can be a bit more difficult. Knowing what might happen following commercial accidents might help you decide which type of commercial vehicle insurance is right for you.

Commercial accidents involving other vehicles

Where your business vehicle is involved in an accident involving other vehicles, such as a car or motorcycle, commercial insurance can help soften the financial blow if the driver of the vehicle is found to be at fault. Here are a few scenarios:

• Commercial driver unintentionally at fault: If you have third party commercial coverage, damage to the vehicles of third parties (commercial or private) will be covered up to the limit of the policy. Damage to your own company vehicle will not, unless you’ve secured comprehensive insurance.
• Commercial driver not at fault: If your driver is not at fault, usually liability will fall to the party who is. Third party car insurance is a legal minimum in Hong Kong and, once fault is confirmed with the third party, their insurer will pay out for any damage incurred by your commercial vehicle. In disputed cases, you may be waiting some time while courts determine which party caused the incident. In these cases, only comprehensive plans will pay for your own damage before seeking reparations from third parties once blame is assigned. Third party insurance will not.
• Commercial driver intentionally at fault: If the driver of your commercial vehicle is found to have breached the insurance policy details, such as driving without a license or under the influence, no insurer will pay out for any damages to yours or a third party’s property. This will leave it to third parties (drivers or their insurers) to potentially sue your driver or your company to recover their costs.

Commercial accidents involving property

Commercial vehicle insurance can also cover your liabilities in instances where the damage done is not to another vehicle but property.  Check out these scenarios:

• Commercial driver unintentionally at fault: Again, third party coverage will cover the cost of property damage incurred by third parties - but it still won’t cover the cost of repairing your own vehicle.
• Commercial driver not at fault: If a third party, such as a fellow driver, is found to have been at fault, it will generally fall to them to cover the cost of both the property damaged, and the repair cost of your own company vehicle. Again, this is subject to the party taking responsibility for the cause of the accident, or being found by the courts to have been at fault. Your comprehensive commercial policy may cover your costs in the interim, but third party insurance will not.
• Commercial driver intentionally at fault: With drivers of commercial vehicles who have breached insurance policy conditions, insurers will reject claims for damage caused to third party property or your own vehicle. If the third party seeks to make the driver or your company liable, they may have the right to do so through the court system.

Commercial accidents resulting in injury or death

In the unfortunate event that one or more people are seriously injured or killed by one of your company vehicles, the rules are a bit different. Hong Kong law and the insurance system itself puts a high priority on the safety, wellbeing, and recovery of people. Here’s what you might expect to happen where an incident involves personal injury or death:

• Commercial driver unintentionally at fault: If your driver is found to have caused injury or death unintentionally, both third party and comprehensive policies will cover the costs incurred by third parties. In circumstances where your own driver may have been injured or killed, neither third nor comprehensive insurance will cover those costs - those may fall to individual or company health plans, or business liability insurance.
• Commercial driver not at fault: When your driver is not at fault but someone is injured or killed, again the liability will fall with the third party responsible for the incident to cover the costs. Where a third party is found to be uninsured or in breach of their policy conditions, their insurer will still cover the cost of injury or death to third parties (including your driver, if applicable) but may seek legal action (a process insurers call subrogation) to recover the costs of coverage from their own client.
• Commercial driver intentionally at fault: Where it happens that your driver is the one driving in breach of your commercial policy conditions, your insurance company will still pay for the injury and death of third parties - but may seek to recover the expenses from your driver and/or your company.

What if you have no company vehicle insurance or it’s expired?

If you allow your drivers to drive a commercial vehicle without insurance, or knowingly let them do so without a license, your company can be left liable for any actions caused by them whilst operating the vehicle. In the case of property or vehicle damage, it will generally be the Hong Kong Police who will hold you liable for the costs of damages caused to third parties, as well as being fined for breaking Hong Kong's road ordinances. This can be true as well where your company allows commercial vehicles to operate with an expired insurance policy. Expired insurance is effectively no insurance, so be sure to keep on top of your renewals.

In the case of injury or death, you and your driver will again likely be liable to meet the costs of third parties if it is found that your driver is at fault. An important note for those who find themselves victims in such circumstances is that, when the party at fault is not covered by insurance (either by not holding valid insurance, or by breach of its conditions), it may require legal action against the commercial driver or company in order to enforce payments for responsibility.

In instances where either the commercial driver, company, or both go bankrupt as a result of such action, the Motor Insurers' Bureau of Hong Kong has established a fund to cover the personal injury and death costs of those left without recourse. The existence of this fund is not to get companies off the hook from meeting their responsibilities during commercial accidents, but simply to provide a safety net for the people who find themselves out of options when all is said and done.

Knowing what to do in commercial accidents

When you or your staff are involved in an accident whilst operating a commercial vehicle, the first thing to remember is to stay calm. We’ve actually got a handy page on what people should do after an accident, which includes information on when to call the police, and when to exchange insurance information.

Similarly, we’ve also written about things not to say in an accident before - which can help protect you, your staff, and your company from potentially jeopardizing your insurance claim or legal standing during the moment.

Securing the right commercial vehicle insurance for your company

Securing insurance is a mandatory requirement in Hong Kong, however not all commercial vehicle plans are created equal. Like businesses themselves, there are a range of options available that can either cover too much, cover too little, or cover just the right amount for your needs. Finding that good fit can be difficult, but not if you use an experienced car insurance broker such as Kwiksure.

Our expert team have been delivering car insurance solutions for individuals and businesses in Hong Kong for almost 20 years and know the policies inside out, the laws of using Hong Kong roads, and how best to support corporate and business clients looking to protect their vehicles. For more information, contact the team at Kwiksure today!