Top 8 motor insurance myths in Hong Kong

In Hong Kong, as in pretty much every other country, it is mandatory for car owners to secure car insurance before they can legally drive the vehicle. The thing with motor insurance, however, is that, because there are numerous providers, plans, rules, etc, it can all get a little confusing what is and isn't covered. It is mostly because of this that you start to see myths appear when talking with other people. In this article, Kwiksure takes a look at the top 8 motor insurance myths in Hong Kong that all drivers should be aware of.

Myth 1: All insurance plans are created equally

It can be easy to think that because it is mandatory for all drivers to secure at least third-party car insurance, plans offered by providers are therefore equal. This is a myth. As with all myths, however, there is a grain of truth behind it. In Hong Kong, all third-party motor insurance policies are required to offer a minimum coverage of HK$100,000,000 for each event resulting in bodily injury or death of a third party (not the driver). The key here is that this is a minimum. All third-party plans have to offer this level of coverage, while some may offer above and beyond the minimum.

Where third-party insurance plans really start to differ, however, is in coverage for property damage. Pretty much every insurer in Hong Kong includes coverage for property damage in third-party plans, but there is no set legal limit as to how much this coverage should be. Some providers will cover HKD100,000,000 for property damage, and others will offer higher coverage.

There is also the concept of comprehensive insurance. This type of car insurance includes the mandatory third-party coverage and adds in extra coverage elements including theft, coverage of some medical bills, towing costs, etc. There are no legal requirements beyond those listed above for what has to be covered and the associated limits, so you will see wider variation among plans in terms of what's covered and the premiums charged.

Myth 2: Older or cheaper cars aren't a target for theft

To be clear here, Hong Kong is not exactly a hot-spot when it comes to car theft. In fact, according to the Hong Kong Police, there were only 212 vehicles reported missing in 2015, and only 139 from January to April of 2016. But theft does happen, and due to the large concentration of luxury cars in the city, it would be easy to think that luxury cars are the most commonly stolen type of vehicle.

While this is likely true to an extent, there are a number of statistics and stories that do point to the fact that older and cheaper cars are also a target. For example, according to a report from Interpol, Toyota, Nissan, and Honda are among the top-4 most stolen brands worldwide. There have also been stories in Hong Kong of older cars being stolen including this one by Eignsight where a 1996 Honda Civic was stolen.

Kwiksure believes that most of the vehicle theft in Hong Kong is not targeted, rather it is a crime of convenience. For example, if you park your car in an unattended lot and leave the keys in it, you face a much higher chance of having it stolen regardless of the brand of car. It would, therefore, be a good idea to consider including theft insurance for your vehicle. Luckily, this is usually available as an add-on to third-party plans.

Myth 3: The items in my car will be covered if they are stolen

As we stated above, vehicle theft insurance should be something considered by all drivers in Hong Kong. The thing is, there can be some confusion over what exactly is covered if you do secure this type of insurance.

The truth here is that your personal belongings will not be covered by theft insurance if you leave them in your car and they are stolen. The only things that will be covered will be factory installed components e.g., stereo, speakers, GPS, etc.

Myth 4: The colour of my car will increase my premium    

This is 100% a myth. The colour of your car has no impact on your insurance premium at all. That said, there are specifications about your car that will impact your premiums these include:

• Make

• Model

• Engine size

• Age

Myth 5: If I have insurance, I am covered on other cars

If you have a car insurance policy that covers your car, this does not mean that you can hop in other cars and the insurance will carry over. The reason for this is because car insurance policies in Hong Kong are written on only the car. You will need to be insured separately for each vehicle you own, and this policy will usually not cover other vehicles. If you are are driving your friend's car home and are in an accident, it is your friend's policy that will be claimed against.

Interestingly, some insurers in Hong Kong include clauses that stipulate the amount of damage covered should there be an unknown driver (a driver who is not insured on that specific car) driving the vehicle at the time of the accident. This limit is often considerably lower meaning that the owner/main policyholder of that vehicle will likely have more excess to pay.   

Myth 6: Insurance providers can cancel coverage at any time

Like many of the other myths here, there is some truth behind this. Insurers can terminate a policy at any time as long as certain conditions are met. For example, if you knowingly lied during the submission of a policy, or if you breach terms of the policy then the insurer is legally allowed to terminate the policy before it expires.

On the other hand, if you do not breach terms on the policy, then there is no legal reason for insurers to terminate your policy.

Myth 7: Premiums won't increase if I don't report an accident

To be honest, this is actually true. If you don't report an accident, the insurer has no real way of knowing the vehicle/property has been damaged. This is actually a more common occurrence in Hong Kong than one would think, as the insurance claim and reimbursement process is long and drawn out, and requires both the police and courts to assign blame for the accident before reimbursement will happen. Therefore, many people in small accidents may simply agree to pay for repairs out of pocket rather than involve the police and court.  

The problem with not claiming is that it can leave you open to trouble. Let's say you are rear-ended by another driver while sitting at a light. There is minimal damage to the vehicle (at least there appears to be), so you agree with the other driver that they will pay for the repair bill directly instead of involving insurance. There is a ton of risk associated to this. For example, the other driver may refuse to pay. If you then try to submit a claim with your insurer it will be denied because you didn't notify the insurer when the accident happened, meaning you will have to pay damages out of pocket.  

The bigger risk here, however, is that there is nothing stopping the other driver from submitting a claim with their insurer over the accident. The insurer will then come after you or your insurer for damages which will likely result in an increase in your premiums.

In short, it is a far better idea to always involve your provider if you have been in an accident.

Myth 8: My premiums will increase if I age

Unlike other types of insurance e.g., health, you may not see your premiums increase as you get older. This is especially true if you secure a car insurance plan with No Claims Discount (NCD). The reason for this is that NCD gives drivers who drive accident free for a number of years a steep discount on their insurance premiums. In the vast majority of cases, this discount offsets any increase in premiums attributed to your age.

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