Third party vs comprehensive car insurance: What happens when there’s an accident?

In a recent article we discussed the various statistics behind road accidents in Hong Kong. This combined with a number of high profile car crashes has raised a number of questions, especially around insurance coverage.

While the chances of something going wrong on the road are generally pretty slim, drivers should be aware of how their third party or comprehensive car insurance deals with accidents. One major concern drivers often think about is whether their car insurance will protect them should they be the one at fault in the event of a car accident. To answer this question, it’s important to first explain that different types of car insurance policies handle accidents differently. To help, this week’s article by Kwiksure outlines everything you need to know about how different car insurance plans deal with accidents.

Third party vs comprehensive car insurance

Before we look at accidents and your car insurance, it’s a good idea to first be aware of the major differences between various types of motor insurance plans in Hong Kong. Here, we’ve included an overview on each type of plan:

Third party car insurance

As the name suggests, third party car insurance covers the insured against bodily injury or death and property damage to third parties in the event of an accident. Passengers inside the insured’s own vehicle are also covered, but the insured’s vehicle won’t be covered under this policy.

It is worth noting here that all drivers in Hong Kong must have car insurance cover of at least HKD 100,000,000 for any event resulting in third party bodily injury and death, as it is a legal requirement. Most Hong Kong third party only policies, however, will additionally cover third party property damage, usually with a coverage limit of around HKD 2,000,000.

Third party fire & theft

Third party fire & theft (TPFT) car insurance offers slightly more benefits than third party only policies in that they also cover the theft of your car, damages incurred to your vehicle from attempted theft, and losses caused by fires (e.g. arson). As with third party only plans, this type of auto insurance also protects the policyholder in the event of bodily injury/ death and property damage to third parties.

While this type of plan is considered one step up from third party only plans in terms of the level of coverage they offer, in Hong Kong TPFT car insurance policies are oftentimes more expensive than comprehensive car insurance, even though the latter offers more extensive benefits. To find out why that is, be sure to read our recent blog post on the topic here.

Comprehensive

Offering more extensive cover than third party only and TPFT policies, comprehensive car insurance covers everything that third party policies cover (including fire and theft), while also protecting the driver’s own vehicle. A comprehensive car insurance policy can also include a number of extra benefits like vehicle towing coverage if your car has broken down and cannot be repaired.

It’s worth noting here that virtually all comprehensive policies do not cover bodily injury or death of the insured, although a separate personal accident insurance plan can be purchased to serve as a separate addition on top of their auto insurance policy. When buying comprehensive car insurance, you may however find that some insurers will actually offer personal accident insurance free of charge, but this will not be the case with all car insurance companies.

Car accidents and your auto insurance in Hong Kong

Car insurance is a necessity, not just because it is a legal requirement but also due to the fact that it gives you the protection you need should a costly accident occur. While Hong Kong does have relatively low accident and fatality rates, accidents and crashes do occur. To illustrate this point further, let’s take a look at the main points we addressed in our recent blog post on vehicle accident statistics in HK:

• In 2016, there were 16,099 accidents in total. Of the 16,099 cases, 13,543 were slight accidents, meaning no one was hospitalized for more than 12 hours/ no one was hospitalized at all. 2,739 were serious accidents which involved hospitals treating victims involved for longer than 12 hours. There were 129 fatal accidents in 2016, which involved the death of one or more persons within 30 days after the accident occurred.
• In the first half of 2016, most accidents (58 percent) took place at pedestrian crossings. Road junctions accounted for 26 percent of accidents, while other locations (e.g. expressways) accounted for 16 percent.
• In the first half of 2016, the Traffic Branch Headquarters of the Hong Kong Police Force reported that 84 percent of all accidents involved the driver being at fault, whilst other people (e.g. pedestrians) only caused around 16 percent of accidents.

What happens if an accident is the driver’s fault?

Generally speaking, car insurance plans will provide reimbursements to the driver even if the Hong Kong Police deem the accident the insured’s fault. Any accident claims will likely have an impact on your No Claims Discount (NCD), although some insurers do offer the option of NCD protection (stipulations will apply, and varies by insurer).

While car insurance will protect the insured even if the accident is deemed their fault, general exclusions apply, meaning there are certain scenarios in which insurers will not cover the insured. These include:

• Drunk/ drug driving
• Street racing
• Intentional damage
• Damage due to war, terrorist attacks, hostilities, etc.
• Vehicle used for commercial purposes (e.g. vehicle for hire) without adequate commercial vehicle insurance

It’s worth noting that the above list is not exhaustive and exclusions can vary depending on your plan and insurer. Additionally, scenarios like speeding and careless driving are not usually excluded in motor insurance policies, although drivers with demerit points as a result of these activities may see their premium increase.

Please also note that the extent and range of coverage the insured is eligible for will depend on the type of policy they secure.

Extent of coverage

In the table below, we’ve included the extent of coverage generally offered by third party only, TPFT, and comprehensive car insurance plans.

*Personal accident of the insured

While ‘personal accident of the insured’ is in most cases not covered by car insurance policies, in the event that you get into an accident and other parties were deemed at fault, you will likely be covered as a third party on their policy. In other words, your personal accident expenses will still be covered, but it will not be the responsibility of your own auto insurance plan. On the other hand, you may want to consider taking out a personal accident insurance policy, which will provide protection against serious personal injuries should an accident deemed your fault occur.

Do you have questions? Get in touch with Kwiksure today

As the leading motor insurance broker in Hong Kong, our team of experts at Kwiksure have years of experience matching drivers with the best third party and comprehensive car insurance policies on the market. If you have any more questions, or would like to get a free auto insurance quote, click here to contact us today.