Deductibles and Excess

A deductible, or excess, is a predetermined amount that the policyholder must pay towards any claim in regards to vehicle damage that has occured. For example, if a claim is HK$15,000 and the deductible is $5,000, then the insurer will pay $10,000 towards the cost of the claim, and the policyholder is responsible for the initial $5,000. 

Motor vehicle insurance deductibles will only apply for claims pertaining to vehicle damage, and not those involving bodily injury. The reason for this is that bodily injury claims can cost millions of dollars, while property damage claims are typically much less. Under Hong Kong law there is no minimum requirement for property damage coverage. Most insurers will, however, provide up to HK$2,000,000 in coverage for property damage. 

Policies will generally have a number of additional deductibles that may apply depending on the claim. The deductibles typically included on a motor vehicle insurance policy are as follows: 

General This is the deductible/excess that will apply to any claim that you make.
Young This deductible will only apply if the driver of the vehicle at the time of the claim is young (under 25 years of age).
Inexperienced This deductible will only apply if the driver of the vehicle at the time of the claim is inexperienced (they have been licensed, or have a driving history of, less than 2 years).
Unnamed This deductible will only apply if the driver of the vehicle at the time of the claim is unnamed on the policy schedule.
Parking This deductible only applies in the event that someone causes damage to the vehicle when it is stationary. Not all policies will have a Parking deductible.
Theft This deductible only applies in the event that the vehicle is stolen.


One crucial factor to remember in regards to motor vehicle insurance deductibles is that they are
cumulative. Suppose, for example, a policy has the following deductibles: 

General: $5,000
Young: $5,000
Inexperienced: $5,000
Unnamed: $5,000 

The owner of the vehicle lets his newly licensed son, who is not named on the policy and who is 18 years of age drive the car and an accident occurs. In this case the policyholder must contribute $20,000 towards the total cost of the claim. The reason for this is that aside from the general policy deductible, the driver of the vehicle at the time of the accident was young, inexperienced, and unnamed, and as such all of those excesses will apply to the claim.

It is important to note that deductibles will change with insurance companies and even individual policies. Some policies may have extremely high deductibles while other policyholders may not have to pay any deductibles at all.

If you have any questions regarding the deductibles on your plan, contact us today.