They say there are only two things that are for sure in this life: Death and taxes. If you own a vehicle, you can add a third thing to that: paying for car insurance. The problem many have with insurance is not that it's mandatory, it's the fact that almost every year you are going to see your premiums increase. Luckily, there are a number of things you can do to either minimize this increase or even reduce the premiums you pay. Here are five uncommon tactics used by drivers in Hong Kong to reduce their premiums.
1. Ensure that you drive carefully
This might be common sense, after all, there are signs pretty much everywhere telling us to drive carefully. The thing is, this can really pay off when it comes to the premiums you pay for car insurance. This is because of a clause many insurance plans in Hong Kong have called the No Claims Discount (NCD).
In short, the NCD clause in insurance plans will give drivers who drive claims free for a specified amount of time (usually 1+ years) an increasing discount. So, if you drive for say 2 years without an accident you could see a discount of 30% applied to your yearly premium.
This can be a big help in reducing your premium over the long-term, and it is an even more effective tool in Hong Kong as many insurers will actually allow you to bring your NCD with you when you switch providers.
Beyond the NCD, it is important to note that if you are in an accident, or if you have a poor driving record e.g., a number of traffic tickets, you could see insurers raise premiums or even quote you higher premiums when you look for plans. While one or two minor tickets like parking tickets or even minor speeding tickets usually won't influence your premiums, more than a few might see you paying a drastically higher premium when it comes time to renew.
2. Consider alternative transportation measures
While it might not make sense to consider taking alternative transportation like the bus or MTR, doing so could actually have an impact on what you pay for car insurance. How? Well, many insurers will ask new policyholders how much they intend to use their car and what they intend to use it for.
The reason this question is asked is because the more you drive, the higher the chance that you will be in an accident and therefore, the higher the chance that an insurer will have to pay out on a claim. Therefore, if you drive less you may be eligible for lower premiums. In fact, many insurers have a set threshold of distance driven each day. If it is estimated that you will be beyond this threshold, you will usually pay a higher premium.
To be fair here, not all insurers follow this model, so it is worth reading your policy documentation or talking with an advisor here at Kwiksure. We can help determine whether taking public transit or driving your car less will have an impact on your premium.
3. Look into paying a higher excess
Like other forms of insurance, you might have the ability to add an excess to your car insurance plan. This is an agreement where the insurer will cover up to a certain amount on your claim, leaving you to pay the rest. Generally, a higher excess will result in lower premiums.
That said, this could be a risky strategy as if you are in an accident where there is extensive damage you could actually end up paying a large sum out of your pocket. Beyond that, some insurers will actually try to limit what they pay out using unethical tactics such as, as we pointed out in an article in 2015, stating that any repairs made to cars will improve the value meaning they will only cover up to a certain amount. This means you could be paying even more should you have an excess on your plan.
If you are considering an excess, we advise taking some time to think about exactly how much risk you are willing to take. If you feel that you can afford to pay some money should you be in an accident then it might be worth looking into introducing an excess to your plan.
4. Think about the car you drive
As you might remember from when you purchased insurance, you were likely asked what type of car you are looking to insure. The reason for this is that not all cars will be assigned the same insurance premiums even if they are assigned the same level of coverage.
This is primarily due to the fact that cars that are more expensive or have bigger engines will usually have higher costs of replacement and value. This means should a claim be submitted, insurers will need to pay more.
Of course, some cheaper cars may actually have higher premiums when compared with similar models from other manufacturers. This could be due to the fact that the car is more prone to mechanical faults, is stolen more than other models, or any other number of reasons.
In short, if you are looking for a new car, it could be worth discussing your preferred models with a broker like Kwiksure to see what your premium would be.
5. Avoid auto-renewal
In the past few years, an increasing number of insurers are introducing the ability to auto-renew your policy each year. While this certainly saves a lot of time, it could actually result in you missing an easy chance to reduce your premium.
One reason why is that some insurers in Hong Kong have a habit of over inflating premiums each year, especially if you have a NCD. While not common, we have seen insurers inflate premiums 10-20% higher for drivers with NCD than drivers without one, which can essentially cancel out your discount.
Secondly, insurers like other businesses have both good and bad years. An insurer offering a great deal on a plan one year might not be able to maintain it in the future. This means that there might be other insurers out there able to offer better premiums.
It would, therefore, be a good idea to look into the different plans and premiums available each year, at least a month before you renew, in order to see if you will be able to save on your premium.
If you are looking to learn more about how you can reduce your motor insurance premium, talk with a Kwiksure advisor today.