Generally speaking, buying insurance is a personal decision. Having said that, four types of insurance are mandatory according to the laws in Hong Kong. They are boat liability insurance, third-party motor insurance, third-party liability insurance for building management, and employees’ compensation insurance. Today at Kwiksure, we’ll talk briefly about what these four types of insurance cover.
1. Boat insurance
Based on Articles 23C and 23D of the “Merchant Shipping (Local Vessels) Ordinance”, local merchant boats carrying more than 12 passengers are legally required to purchase third-party risks boat insurance. Up to HKD $10,000 fine and imprisonment for 2 years is the highest penalty for those without.
If you, the boat owner, must pay a compensation higher than what the policy covers (e.g. HKD $5 million), then the victim may ask for the difference directly from you. Given that, you refusing to pay the difference means the passenger won’t receive the total indemnity fees.
2. Third-party liability car insurance
According to Article 4 of the “Motor Vehicles Insurance (Third Party Risks) Ordinance”, anyone who drives a vehicle on the roads of Hong Kong must purchase third-party car insurance for that vehicle to comply with the regulations. The law stipulates that the insured amount is HKD $100 million, which covers the policyholder’s legal liability for third-party casualties on the road.
Without car insurance for your vehicle, you’re breaking the law and can be fined HKD $10,000 and imprisoned for 12 months. What’s more, the court can even cancel your driving license for one to three years. If you’ve crashed into a third party but do not already have third-party insurance, the victim can seek help from the Motor Insurers’ Bureau of Hong Kong and receive compensation this way.
3. Building management (third-party risks insurance)
The “Building Management Ordinance” stipulates that the owner’s corporation must secure third-party risks insurance for the shared parts of the building as well as their own property. For a single third-party accident, the coverage amount should not be less than HKD $10 million per policy. In the case of rule violation, the corporation can be fined HKD $50,000.
Note that although this is a statutory insurance, it doesn’t cover legal liabilities arising from illegal structures or construction works in buildings.
4. Employees’ compensation insurance
Based on Article 40 of the “Employees' Compensation Ordinance”, employers must purchase no less than the legally required amount of insurance to cover the employees’ accidental injuries and common law liabilities during their employees’ employment.
If the number of your employees is 200 or less, the coverage amount per accident is HKD $100 million; if the number of employees is more than 200, the insured amount is at least HKD $200 million per accident. Violating these regulations is a serious crime - you can be fined HKD $100,000 and be imprisoned for two years.
In the case that your worker got injured while working, but you didn’t secure employees’ compensation insurance, they can ask the Employees Compensation Assistance Fund Board for help receiving their compensation.
On that note, have you hired a domestic helper? Buying basic domestic helper insurance (i.e. employees’ compensation insurance) meets the bare minimum legal requirements. However, the Labor Department laws require all employers to provide free medical care for their helpers. Since employees’ compensation insurance does not cover healthcare expenses, nor offer enough protection for any legal liabilities, we recommend securing domestic helper insurance.
Unmanned aircraft system insurance might be the fifth type of mandatory insurance in Hong Kong
Drone-related accidents have become increasingly common in recent years. he Civil Aviation Department plans to enact new subsidiary legislation under the “Civil Aviation Ordinance” to regulate drones. On top of using real-name registration, aircraft of various weights must also be covered by third-party liability insurance. The minimum coverage amount should be HKD $5 million.
In 2019, the Civil Aviation Department submitted legislative proposals to the Legislative Council that discussed the use of “small drones” weighing less than 25 kilograms.
The Civil Aviation Department intends to divide drones based on their weight into the following three categories:
- Low-risk drones weighing no more than 250 grams. Buying insurance isn’t compulsory for unmanned aircraft in this category.
- Drones weighing 250 grams or 7 kilograms are required to secure third-party liability insurance with the minimum coverage amount of HKD $5 million.
- "Regulated and low-risk" drones weighing 7 to 25 kilograms’ minimum insurance coverage should be HKD $10 million or higher as specified by the Civil Aviation Department.
Also, you’ll need to comply with the standard operating conditions when flying drones of 250 grams or less. These include a maximum flying altitude of 30 meters and a maximum speed of 20 kilometers per hour. Owners and operators of drones over 250 grams need to be registered. Unmanned aircraft systems weighing more than 7 kilograms must also provide additional security measures.
Industry insiders estimated that for individuals operating small drones, the annual insurance premium will cost more than HKD $1,000. The business community will likely refer to Taiwan’s practice of "buy a drone and get free insurance". As a result, it might be difficult for players who want to purchase insurance separately.
Contact Kwiksure for more insurance solutions
Kwiksure has more than 20 years of experience in the car insurance industry. In addition to car insurance (third-party and comprehensive), we also provide home insurance, motorcycle insurance, Voluntary Health Insurance Scheme (VHIS), Hong Kong-Zhuhai-Macao Bridge insurance (HZMB), and many more.