Private motor vehicle insurance in Hong Kong is taken for a specific vehicle (only one vehicle per policy) and the policyholder must be the registered owner of the vehicle, whether this is a company or personal name. If the registration is in a personal name most insurers will require the policyholder to be a Named Driver on the policy also (subject to their approval) although some do not.
Most private motor vehicle insurance policies are for any driver, as long as they hold a valid Hong Kong Driving License and have your permission as owner of the vehicle. Therefore you may legally allow someone to drive your vehicle who is not a Named Driver on your policy, however in this case most insurers will increase the excess payable in the event of a claim for Unnamed, Young and Inexperienced Drivers.
With any type of motor insurance in Hong Kong, an excess (or ‘deductible’) is usually applied, and the amount depends on the type of claim being made (Third Party Property Damage and/ or own-damage or theft) and who was driving the vehicle at the time of the accident. For example, you are a Named Driver on your motor insurance policy and you are driving at the time of an accident leading to a claim for damage to your own vehicle.
As an example, if you were in an accident and the cost of repairs were HK$ 20,000 and your Car insurance policy had an Own-Damage (or “general”) excess of HK$ 5,000 then the total claimable amount, before depreciation, under your Hong Kong car insurance policy would be HK$ 15,000.
Should you lend your vehicle to a friend, and they are not named as a driver on the car insurance policy, should they experience an accident then an additional Unnamed Drivers excess may apply.
As an example, your friend (who is not a named driver on the policy) gets into an accident while driving your vehicle. The total cost of repairs are HK$ 20,000 and your car insurance policy has an Own-Damage (or “general”) excess of HK$ 5,000. In addition to this the policy also has an Unnamed Driver Excess of HK$ 5,000. As such, the total claimable amount, before depreciation, under the policy is HK$ 10,000.
This is because you have had to pay both the General excess and the Unnamed Driver excess on the policy as your friend was not a named driver under the car insurance plan.
In Hong Kong, a Young Driver is someone who is under 25 years old, and an Inexperienced Driver is someone who has held an approved driving license for less than two years. If the Unnamed driver at the wheel also happens to be Young and/ or Inexperienced an additional excess may apply.
For example, you lend your car to your friend who is both Unnamed on your policy and, at the age of 24, considered to be a Young Driver. Your friend has an accident while driving your vehicle where the cost of repairs comes to HK$ 20,000. You are responsible for paying the General deductible of HK$ 5,000, plus the Unnamed Driver Deductible of HK$ 5,000 and the Young Driver Deductible of HK$ 10,000.
As such, in this instance, you will be unable to claim under the policy as the total cost of repairs is equal to the total deductible amount of the plan, HK$ 20,000.
Another common excess applied by many insurers in Hong Kong for own-damage claims is a “Parking” excess, applied in addition to the own-damage excess when the vehicle has been damaged whilst parked.
Unnamed Driver: someone who is not a Named Driver on your policy and therefore does not drive the vehicle regularly (you are obliged to inform the insurer of all regular drivers and name them on the policy subject to their approval).
A policy can then have almost any number of Named Drivers, subject to the insurer’s approval. It is common among the insurers to allow for two Named Drivers on a policy, and for third and subsequent Named Drivers an additional 10% per driver is charged (what is termed a ‘loading’ to the premium).
Unnamed, Young and Inexperienced Driver excesses often also apply to claims for damage to third party property (excess is applied to claims under Section (I) Insurance, and excess is applied to claims under Section (II) Insurance).
For example, if an Unnamed Driver, who is 24 and has held a Hong Kong Driving License for one year is, at the wheel at the time of the accident and is found legally at fault for the accident, and the other party involved sustains damage to their vehicle also, the scenario would look as follows.
The total Third Party Repair cost after the accident is HK$ 40,000. The General Excess on the policy is HK$ 5,000, the Unnamed Driver Excess is HK$ 5,000, the Young Driver Excess is HK$ 10,000 and the Inexperienced Driver Excess is HK$ 10,000. The Total Excess payable by you is then HK$ 30,000, with your claimable amount under the policy being HK$ 10,000.
However, with a comprehensive policy, which includes Section (I) Insurance for coverage of Damage to, and Theft of, your motor vehicle, you are responsible for a second set of deductibles for the repair costs to your car, and not the third party.
Your Own-Damage repair costs after the accident are HK$ 40,000. The General Excess on the policy is HK$ 5,000, the Unnamed Driver Excess is HK$ 5,000, the Young Driver Excess is HK$ 10,000 and the Inexperienced Driver Excess is HK$ 10,000. The Total Excess payable by you is then HK$ 30,000, with your claimable amount under the policy being HK$ 10,000.
Under Hong Kong law all drivers must hold a valid driving license for Hong Kong. All residents or anyone intending to take up residency here must obtain their Hong Kong license before driving. This has been a grey area in the past and you may receive conflicting information from various sources. Should the Transport Department allow you to drive on an approved overseas/ international license temporarily you should obtain something in writing from them. The insurers will follow legal guidelines and should they find you had not held a valid HK license at the time of an accident they may refuse the claim, cancel you policy, and you may also face legal consequences should the police find you did not hold a valid licence at the time and were therefore driving illegally.
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