Motor Insurance Policy Details and Insurance Terms Glossary

Your Motor Insurance Policy Explained

The wording of an insurance policy in Hong Kong is not regulated by the government or the insurance authority; as such insurance companies are free to use the language of their choice in the policy documents (the insurance schedule and the certificate of insurance). Most motor vehicle insurance policies will use similar wording. Policies will normally take the form of a list that will outline the specifics of what is covered under the insurance. 

A Listed Policy will typically be presented as follows:

• Policy Number: This is the number assigned to your policy by the insurer. This number is important as it will typically be on all correspondence between yourself and the insurance company. A policy number is needed in the event of a claim.
• Period of Insurance: This will outline the timeframe of the policy. Motor Vehicle Insurance policies will typically last for 1 year, after which they must be renewed.
• Date of Issue: This will note exactly when the policy was issued. Please note that the date of issue and the start of the policy may not always be the same.
• Name and Address of the Insured: This will specify the primary driver/owner of the policy as well as their current correspondence address. Any other drivers of the vehicle included in the policy will be named later. It is important that you check the policy and ensure that your name and address are correct.
• The Risk: This section will pertain specifically to the vehicle that is being insured and will include:
• Type of Cover: Whether the policy is providing Third Party or Comprehensive coverage.
• Registration Mark: This is the vehicle's license plate and will typically consist of two letters and up to four numbers. (e.g. AA1111)
• Make/Model: Information as to the manufacturer of the vehicle and its model (e.g. Porsche 911 Carrera).
• Body: Is the vehicle a SUV, Coupe, Sedan, Truck, Motorcycle, or Bus?
• Year of Manufacture: The year that the vehicle was made (e.g. 2002).
• Engine and Chassis Number: The unique numbers assigned to both the engine and chassis of the vehicle. These can be helpful in tracking the vehicle in the event of theft.
• Seating Capacity: Typically, the number of people who can fit in/on the vehicle excluding the driver.
• Engine Capacity: The size of the vehicles engine in CC (e.g. 3596 Cylinder Capacity).
• Sum Insured: Applicable only to comprehensive insurance policies, this is the total estimated value of the vehicle in Hong Kong dollars.
• NCD: This will state the total amount of No Claims Discount that the policyholder is receiving on the policy as a percentage of the premium. Learn more about NCD.
• Occupation of Policyholder: This will state what the policyholder does for a living (e.g. Banker)
• Named Driver(s): The individuals listed here are named on the policy, as such, should an accident occur, they will be exempt from the unnamed driver excess/deductible.
• Excess/Deductible: This section will illustrate all the excesses/deductibles that may be applicable to the policy, and the amount of the excess/deductible in question. 
• Policy Limit: Typically this is the final section in the policy schedule and will outline all the financial limits of liability for the policy (the amount of coverage that the policy will provide). The policy limits will always be subject to the excesses and may have additional implications outlined in the policy conditions. As an illustration, the policy limit required by law for Third Party Death or Bodily Injury is a minimum of HK$100,000,000.
• In addition to the Policy Schedule there will typically be five (5) additional clauses that can be attached, but may not be mentioned in the Schedule of Insurance.
• Recital Clause: This is typically the introduction to the policy and will make reference to the policyholder and the insurance company by name. The Recital clause may not always be referred to by name in the policy and can make mention of the application/proposal form and the declaration as forming the basis of the contract. Again, the Recital Clause may not always appear on your policy, especially if you have renewed.
• Operative Clause : This will outline the circumstances under which the insurance is active. This section is sometimes referred to as the Insuring Clause, but will always be recognizable due to the information that it contains. The Operative Clause will outline the perils of the policy (exactly what is covered under the insurance), and may contain information pertaining to the policy exclusions and any excesses/deductibles applicable to the policy. The Operative Clause will not appear in every policy, especially those that are formatted as a scheduled policy.
• General Exceptions: This section is more commonly known as the Policy Exclusion section, and will outline all the risks that are not covered under the policy.
• Policy Conditions: This is the section that will outline the conditions regulating the policy. The Policy Conditions section will usually take note of claims, arbitration in the event of a dispute, cancellation of the policy, the penalties for under insuring the vehicle (average), common law amendments (such as subrogation and contribution), and premium payment.
• Signature Clause: This is so known as it contains the signatures on behalf of the insurer to confirm the policy.

Confused by insurance terminology? Kwiksure is here to simplify insurance terms with this handy A-Z glossary of insurance vocabulary. If you’ve got any more questions, we’re more than happy to help! Simply contact our team of experienced advisors today or call 3113 1331.

A

Accident - An unexpected event.

Accidental bodily injury - Injury caused to a person/people without deliberate intent.

Adjuster - A representative of the insurer, someone who investigates insurance claims to determine the liability of the insurer.

B

Betterment - Most commonly found in motor insurance policies, the betterment clause stipulates that once a damaged item/piece of property has been repaired, its resulting condition is more valuable. Therefore, the net improvement won’t be reimbursed by the insurer.   

Boat insurance - This will provide coverage for your vessel’s hull, machinery, fixtures and fittings.

Broker - A registered advisor and intermediary that acts on behalf of an insurance company.

Business insurance - Provides protection from losses incurred during the operation of a business. There are many types of business insurance, such as coverage for property damage, public liability, professional indemnity, etc.

C

Cancellation - The termination of an insurance policy.

Claim - A reimbursement provided by the insurance company for losses covered by an insurance policy.

Claims history - A record of previously submitted claims.

Comprehensive motor insurance - A motor insurance term, this type of policy provides extensive cover for both third party and first party losses in the event of an accident.

Conditions - Circumstances as specified in the insurance contract which must be upheld.

Contract - A legal agreement between two parties.

Copayment - A predetermined fixed amount paid by the insured every time they submit a claim.

Coverage - The amount of liability covered by an insurance policy.

D

Deductible - An amount to be paid by a policyholder (see: Insured) each year or for each claim before it can be submitted.

Dental insurance - This is usually an add-on benefit, providing coverage for dental costs.

Depreciation - The reduction in value of an insured item.

E

Exclusion - Clauses within the policy that rules out coverage for certain circumstances, situations, and acts.

Exposure - The risk of loss.

F

Fire insurance - This will protect your house or apartment in the unfortunate event of a fire. Some fire insurance policies will additionally cover other perils, this is called an ‘Extra Perils’ policy.

Fraud - An illegal act with the intent of gaining benefits and value which the insurer or the insured are not legally entitled to.

G

Golf insurance - Covers bodily injury liabilities to third parties or property damage while playing golf.

Grace period - A provision in insurance contracts that allows payment without penalties for a specified period of time after the payment due date.

H

Home insurance - This protects the possessions in your home from unforeseen accidents, theft or home improvements.

Health insurance - Insurance that covers the cost of health care.

I

Insured - The individual, group, or entity covered by insurance. The insured is also commonly referred to as the policyholder.

Insurer - The person or company that issues an insurance policy to the insured.

International plans - An insurance policy that is not limited to one country or area, and is usually globally portable.

L

Life insurance - Covers financial losses incurred from the death of the policyholder.

Local plans - An insurance policy that is limited to one country or area. Policyholders will not be eligible for being reimbursed for claims outside of the country specified in the local policy.

Loss adjustor - A person who handles claims and assesses how much should be paid out to the policyholder.

M

Maid insurance - Protects domestic helpers from accidents or illnesses incurred during their time of employment.

Marine insurance - Provides cover for loss or damage of cargo, ships, etc.

Maternity insurance - This is usually an add-on benefit. It covers treatment costs related to one’s pregnancy.

Medical insurance - Covers the policyholder’s health care related expenses.

Motor insurance - A mandatory policy required by law, this policy offsets costs incurred in the event of a motor vehicle accident.

N

No Claims Discount/NCD - A discount applied to a policy when you go for a certain duration of time without filing a claim.

P

Policy - An insurance contract between the insured and the insurer.

Policy period - The duration of a policy.

Policyholder - The individual, group, or entity covered by insurance. The policyholder is also commonly referred to as the insured.

Premium - The amount paid to an insurer for an insurance policy.

Q

Quote - An estimation of the premium you will have to pay for a selected policy.

R

Renewal - The continuation of an insurance policy, secured through subsequent premiums paid by the insured.

Rider - A term often used by insurance companies, this refers to the additional benefits that can be added to a policy at an extra cost .

Risk - The likelihood of negative occurrences caused by an insurable event.

T

Third party motor insurance - Provides the level of minimal cover required by law. This type of motor insurance covers the policyholder for their liability to third parties in the event of an accident.

Travel insurance - Protects you from a number of risks associated with going abroad, such as medical emergency costs, loss of baggage, etc.

U

Underwriter - Underwriters are trained to undergo underwriting by assessing and evaluating risk, and use this knowledge to determine how much the policyholder should pay for their insurance plan and the level of coverage they should receive.

Underwriting - A process employed by insurance companies to assess and determine a potential client’s risk and eligibility for coverage.

V

Vision insurance - This is usually an add-on benefit, and provides coverage for optical-related costs.

W

Waiting period - Also known as the probationary period, this refers to the period of time from when you purchase your insurance policy before you are eligible for making any claims.