Published on: 10 June 2015 by Romil Motwani
Motor Insurance has many differences around the world in terms of requirements, coverage and premiums. This holds true between policies in the United Kingdom, the United States and Hong Kong (despite its status as a former British colony). However, there are also many similarities between policies in the different countries and it can be difficult to understand the caveats of all the policies.
CCW Global, Hong Kong’s leading bespoke insurance brokerage can help you understand the different vehicle insurance plans and will now take you through the differences and similarities in policies issued in Hong Kong, the U.K. and U.S. to help any incoming expats understand Hong Kong’s motor insurance practice and standards.
To drive a vehicle in Hong Kong, not only are you required to have a valid driving license (check the validity of your foreign license in Hong Kong here) but you must hold a valid insurance policy for your vehicle in order to license it for driving on public roads. There are several forms of motor insurance in Hong Kong, but the most popular are Third Party Car Insurance and Comprehensive Car Insurance.
Third Party Car Insurance is the minimum legal requirement for motor insurance in Hong Kong and only covers your liability towards third parties should you get into an accident. It will not cover you for any damages you incur in any incident. The standard limits of the policy are HK$100 million for any third-party death or bodily injury, and HK$2 million for damage to third party property.
Comprehensive Car Insurance includes the covenants of Third Party Car Insurance and also provides coverage for the market value of your vehicle for any accidental damage or theft of your automobile.
Motor policies in the United Kingdom are very similar to Hong Kong in that insurance is required in order to operate a vehicle in the U.K. and the minimum requirement is Third Party Car Insurance.
However, coverage limits do differ in the U.K. compared to Hong Kong and there are other options for insurance policies in the U.K. For example, insurers in the U.K. offer Third party car insurance along with fire and theft protection, which provides the policyholder with protection from any damage to their vehicle from any fire damage or theft of the vehicle itself.
Another major difference can be seen in the fact that there is an unlimited coverage limit for bodily injury in the U.K. which means that if a third party were to get injured as a result of an accident that you caused, they would be fully reimbursed for all medical expenses, rather than just up to the policy limit as is the case in Hong Kong.
In the USA, each state has different policy requisites for motor insurance. However, all states require that you have motor insurance in order to operate a vehicle.
Motor insurance coverage requirements in the United States are denoted by three numbers, separated by a slash. The first two numbers refers to an individual bodily injury limit and total bodily injury limit respectively, whilst the last number refers to bodily damage liability limit.
For example, New York’s coverage requirements are 20/50/10, which means that the coverage must protect at least US$20,000 per person for any bodily injury up to a total of US$50,000 for all people involved and must cover at least US$10,000 of property damage. It is important to understand the notation used as this is a common notation used by insurers throughout the United States when they present their products.
Throughout the United States, the state mandated individual bodily injury limit ranges from US$10,000 (Florida) to US$50,000 (Alaska), total bodily injury limit ranges from US$20,000 (Florida) to US$100,000 (Maine) and total damage liability limit ranges from US$5,000 (California) to US$55,000 (Wisconsin). As previously mentioned, these limits vary from state to state and each state has its own unique set of coverage requirements. It is therefore important to understand the state’s coverage limit before operating a vehicle.
One thing that many people don’t know before coming to Hong Kong is that their claim history in another country can positively impact the premiums they would pay when driving in Hong Kong should they have as little as a single year with no claims experience. This is known as a no-claims discount, where you pay a discounted premium if you have no claims history with your insurance provider due to the low threat you pose to the risk holder.
In Hong Kong, you can save up to 60% of your premium by not making a claim on your policy as shown on the graph below. However, should you need to make a claim for an accident that you are found to be ‘at-fault’ for, you may see a reduction or fully cancelled discount.
You can transfer your no claims history from your insurance provider in the U.S. or U.K. and realize the savings immediately, rather than paying the full premium upon your arrival in Hong Kong. Please contact your Hong Kong car insurance company to discuss their no claims discount regulations and how you can transfer your overseas history to your new policy.
Motor insurance policies in the U.K. also have a no claims discount covenant in the policy. However, savings can be even higher than the chart shown above, with premium savings of up to 75% for some insurance providers! Despite this, the schedule of a no claims discount is similar to the graph. Unfortunately, claim history generally cannot be transferred over to the U.K. if you are a foreign driver.
In the U.S., there is no ‘no claims discount’ applied to premiums on motor insurance policies. However, as with most policies, your claim history and driving record will have an impact on the amount of premium you pay due to the differing levels of risk of each driver and you can realize savings on your premium by having a clean driving record.
Another topic that drivers coming to Hong Kong don’t realize is the price of motor insurance in Hong Kong compared to other countries.
Hong Kong has extremely cheap premiums for vehicle insurance with premiums significantly lower premiums than in the U.K. and U.S. as shown in the chart below, with New York City and London used as comparison. With the knowledge that motor insurance premiums are significantly cheaper, expats can come to Hong Kong without any worries regarding their vehicle insurance policies .
There are several reasons for the lower premium compared to the United Kingdom and the USA, which include fewer registered vehicles and an older population.
In Hong Kong, there are 504,324 cars and taxis on the road whilst London has 2.6 million registered cars and New York City has 1.8 million cars on the road. Therefore, by having fewer cars on the road there is a lower risk of getting into an accident which results in a lower premium.
Additionally, the median age of Hong Kong’s population is 42.8 years old whilst London residents have a median age of 34 years old and New York City residents have an average age of 35.6 years old. An older demographic will generally have more driving experience than a younger age group which results in less risk for the insurance provider, resulting in a reduced premium. Hong Kong also has a very limited motorway network in comparison to the U.K. and USA which means that Hong Kong drivers will tend to drive less than their British or American counterparts, another plausible reason for a lower premium.
Motor insurance is a legal requirement to drive in Hong Kong and can protect you and your loved ones from financial distress caused by any motoring incident you may be involved in. Additionally, with premiums in Hong Kong for vehicle insurance so low, you can have peace of mind whilst driving in Hong Kong without worrying about the effects on your wallet.
CCW Global, an expert in automobile insurance can help to insure your car for use in Hong Kong and fit any motor insurance plan to your specific needs. With our insurance professionals, we can provide you with the vehicle insurance plan you need at the lowest possible cost.
If you would like to receive a free quote on a Hong Kong car insurance plan, please fill in the quotation form at the top of the page. One of our insurance experts will get back to you shortly to discuss your specific needs. You can learn more about this process by clicking CCW Car Insurance Quotes.
Should you have any questions regarding Car Insurance and whether it is right for you, please contact us today!