Motor Insurance in Hong Kong

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1. What is required by law?
2. Is the driver covered for injury to himself and passengers?
3. What is the effect of having a 'No Claim Discount or No Claim Bonus' on how much my insurance costs?
4. If I have a Comprehensive policy, What is the rule of 'Betterment' and how does this work?
5. How can I interpret the excesses!?
6. What is the MIB and MIB Levy?
7. What is the Tariff Rate?
8. What is the "special" or "client discount"?
9. What relevance is my sum insured?
10. When do I need a Hong Kong License?

1. What is required by law?

In Hong Kong, it is compulsory to have HKD100,000,000 Third Party Liability insurance in case we injure someone.

In addition, insurers provide liability cover for third party property damage. The maximum property damage cover is HKD2m (This property damage limit can sometimes be increased by negotiation, most commonly to HKD5m).

2. Is the driver covered for injury to himself and passengers?

There is NO cover for the driver, as he is not a third party. There is cover for the passengers, bystanders and those in another vehicle, but there is no cover for the drivers medical bills, rehabilitation costs or the long term loss of income that may result. This requires separate insurance.

3. What is the effect of having a 'No Claim Discount or No Claim Bonus' on how much my insurance costs?

The discount rules are:

Number of full years provably owning a car & claim free % Discount off annual premium Example of HKD10,000 normal premium
0 0 HKD10,000
1 20 HKD8,000
2 30 HKD7,000
3 40 HKD6,000
4 50 HKD5,000
5 60 HKD4,000

In Hong Kong, few insurers will agree to this if you have not owned a car in the past year.

If you have owned a car in the past year, or still own a car but keep it abroad to use like a rental vehicle, the insurer will likely agree to reduce your premium – IF you can provide a letter from the previous/current insurer, showing how many years in the past 5 you have been claim free.

It is possible for you to transfer your 'no claim entitlement' to your spouse or your company, or vice versa. Different insurers have different rules on this.

As soon as you inform an insurer of a claim or a likely claim, the market practice is to remove your No Claim Bonus entitlement and only to return this to you after there has finally been a court case to determine who was at fault.

4. If I have a Comprehensive policy, What is the rule of 'Betterment' and how does this work?

If you have arrived from the US, Europe or Australia for example this will be a real shock if you claim.

The theory goes like this: The intention of the insurer is to not make us 'better off' as the result of a claim.

This means that assuming our car is more than a year old the insurer will only pay the value of second hand parts.

But because there are relatively few cars owned by people in Hong Kong, the second hand part market is not well developed and in any event second hand parts are often unavailable. As a result, people use new parts, which incidentally will often need a special order from overseas, thus slowing the repair process.

A common example would be someone runs into the back of your vehicle while you are stopped or slowing in traffic. The rear end assembly and boot (trunk), with parking sensors etc may easily cost HKD30,000 (labour aside). If your car is already 7 years old you may find yourself offered say just HKD15,000.

Some insurers will negotiate to waive 'Betterment' but only for cars less than 7 years.

5. How can I interpret the excesses!?

The market practice in Hong Kong is for the Excesses or deductibles accumulate.

So say you leave your car to a young restaurant attendant to park. If he/she has an accident, say hitting a post in the parking area, you will find the insurer will add:

  • Young (under 25) Excess
  • Inexperienced (under 2 years) Excess and
  • Third Party Property Damage Excess, if damage is done to the post

This will mean you will be responsible to pay the total of these excesses BEFORE the insurer will begin to pay.

6. What is the MIB and MIB Levy?

"MIB" refers to the Motor Insurers Bureau that was set up in Hong Kong in 1980. All insurance companies in Hong Kong who are authorised by the Hong Kong Government to write motor vehicle insurance are required to be members of the Bureau.

MIB Objective:

The principle objective of the Bureau is to secure the satisfaction of claims made by the injured or their dependents in respect of liability for death or bodily injury which arises from the user of motor vehicles on the road, when the use of the vehicle is required to be covered by the Motor Vehicles Insurance (Third Party Risks) Ordinance.

On behalf of this Bureau insurers are responsible to collect a charge that is currently 3% of the premium to provide compensations to victims of traffic accidents where the person causing the accident is:

  • Untraceable or,
  • Uninsured

7. What is the Tariff Rate?

Historically insurers had an agreement as to how to charge for insurance and most insurers, apart from AXA, rely on some a formula which they then modify according to their experience.

AXA rates by driver age, sex, occupation and especially the repair costs.

Other insurers may additionally factor in the area in which you live but there are none of which we are aware that rate according to repair costs.

The 1998 recommended basis for motor premiums were as below:

Hong Kong Federation of Insurers - Motor Tariff
Accident Insurance Association Premium Recommendation 1998
Private Cars Basic Rates Additional percentage of car value +
Engine Size Comprehensive
Up to 1850 cc HKD8,600 8.40%
1851 cc - 3500 cc HKD9,500 5.50%
Over 3500 cc HKD9,700 5.80%
Engine Size Third party Only
Not relevant HKD5,000 Not relevant

So for example, if you car was worth HKD250,000 and the engine size was 2.0 liter, then your premium BEFORE any levies of discounts would be calculated as follows:

HKD9,500+ HKD250,000*5.5% = HKD9500+HKD13750 = HD23,250

There was also a table for such things as goods carrying vehicles, taxis and hotel/airport hired cars.

If you were taking Third party only cover the starting premium would be HKD5,000

8. What is the "special" or "client discount"?

A client discount is a discount off the insurers version of the tariff rates.

9. What relevance is my sum insured?

The sum insured is substantially irrelevant should you claim. The reason is that Hong Kong policies are not generally AGREE VALUE policies.

A handful of insurers will write a agreed value policy.

For the rest of the market, if you write off your car the sum insured will be the market value of the car.

In our experience, because there is no definitive reference that is universally accepted for car values, the payout received if your car is damaged beyond economic repair, will be likely its wholesale rather than retail value.

The Australian company 'Red Book' provides and on line service, like Blue Book in the US, but few insurers will accept a Redbook valuation without question.

Part of the problem is the small size of the market and the buoyancy of the new car market which mean that in the second hand market can be very volatile.

Certainly car values drop off rapidly after 7 years when cars begin to need an annual MOT- Motor Transport Test, to prove they are road worthy.

Each year you insure your car be careful to advise your intermediary the revised car's value. if in doubt, we suggest simply depreciating by 10-15%.

Note: Motor Vehicle Finance companies do not accept a car value being shown on the policy as "Market Value" and will insist on a sum insured being the loan amount you have taken.. A few finance companies will agree to reducing the sum insured each year.. best check with them!

10 . When do I need a Hong Kong Licence?

In order to drive lawfully in Hong Kong, it is required to have a Hong Kong issued driving licence. Using a driving licence issued by foreign authorities as your sole licence, e.g. Driving licence issued in California, USA, will not allow for lawful driving in Hong Kong.

For Overseas Driving Licence Holders, a Hong Kong issued driving licence can be applied for through these means:

  • Apply for a full driving licence by direct issue without test;
  • Apply for a temporary driving licence; or
  • Driving on strength of their valid overseas driving licence or international driving permit if they are visitors to Hong Kong (visitors mean that they arrive at Hong Kong other than to take up residence for a period not exceeding 12 months).

(More information can be found at: td.gov.hk)

Third Party Liability insurance is the minimum you need to have on your car, according to the law.

We suggest you think twice about this cover, however, especially if you are new to driving in Hong Kong and especially if you have a busy life.

The reason is that if you only have Third Party cover and say some one hits you from behind.. IF you only have Third Party cover then the onus on chasing the offender will be entirely yours. In Hong Kong the privacy legislation and Police Reporting procedures are such that it will take time for you to find out information of of the driver and the insurer and even longer to try and make the offender pay. This process could easily take a year or two and many give up.

Comprehensive cover includes the cost of repairing damage to your own vehicle.. whether or not you are at fault.

If your car is worth under HKD1,000,000, most policy wordings will be almost indentical in terms of benefits.

Do NOT admit you are responsible

The first principle at work here is that you are not permitted, by the terms of your insurance policy, to make ANY admission of liability, even if you feel you are clearly at fault. The reason is that there may be objective evidence available to suggest you were not at fault or less at fault than you may first assume.

If you do admit liability, you waive your rights to claim under the insurance.

And even for a minor accident where there may seem to be no injuries, weeks or months later you may face a demand for compensation for some injury that is slow to manifest.

So to recap: under no circumstance admit fault!

Stopping Traffic?

If you have an accident in traffic and your vehicle(s) need to be moved to clear the way for others or free anyone injured before the Police arrive, make sure to make a sketch plan of the accident while the details are fresh in your mind and before the vehicles are moved.

Record the information of all other drivers. You should try and obtain the following information:

  • vehicle registration numbers
  • make and model of vehicles
  • names
  • I.D. numbers
  • telephone numbers
  • addresses
  • names of Insurance Company etc
  • Record the information of witnesses. Write down names, addresses and phone numbers.

You may find the other driver uncooperative – but if he/she does not provide any information at the site, he/she has to report to any police station for reference as soon as possible (within 24 hours).

If the other driver has been injured and is in the hospital, the police will go to the hospital to get the accident details.

NOTE: If police are not called YOU MUST report the accident to the Police within a day.

Advising Navigator or the insurer

It is imperative that if you have an accident and there is the possibility of a claim, that you inform us and/or the insurer. To not do so will make it virtually impossible to be able to successfully claim later as the insurer will argue their right to investigate etc has been adversely affected by the passage of time.

If you have a comprehensive policy and are claiming for damages to your vehicle, you should submit the estimate of repair costs to your insurance company before you start to repair the vehicle (normally your garage will send a copy directly to your insurance company).

Pass all Summonses, correspondence in relation to the accident to your insurance company unanswered.

Repairing your Vehicle - IF you have Third Party Only Cover

If you are seeking compensation off the other driver’s insurance, you will first need to make a letter of demand against the driver who will then pass on this demand to his insurer, which will not normally authorize any work to be done until their client is successfully prosecuted for negligent driving.

The efforts you will have to expend to obtain recompense in this way. will be such as to make you regret not taking Comprehensive cover. We know of cases where it has taken more than 2 years to have such matters settled.

Repairing your Vehicle - IF you have Comprehensive Cover

Do NOT start to repair your car before the insurance company agrees to pay the cost.

Most commonly the insurer will quickly send a loss adjuster to inspect your car before you obtain any necessary repairs.

An insurance company may repair, reinstate, replace the vehicle or pay in cash the amount of such loss or damage.

The Insurance Company's indemnity pursuant is usually limited to:

  • the reasonable market value of the Vehicle at the time of its loss or damage
  • the Insured's Estimated Value of the vehicle as specified in the Schedule

whichever is lesser.

You may choose the garage in which you want to fix your vehicle after an accident, unless otherwise stated in the policy.

Some companies require policyholders to use the appointed garage.

These companies usually offer a premium discount in exchange for your agreement to this provision.

NOTE: Most often you will be forced to pay the difference between the cost of new parts used and second hand parts, unless you have a policy that waives the rules of ‘betterment’ by which you are not supposed to be made better off by claiming.

Loss of No Claim Discount

Be aware if you submit a claim, the normal "No Claim Discount" (NCD) will automatically be forfeited or substantially forfeited upon renewal of the policy.

If no third-party bodily injury resulted and incontrovertible evidence can be produced to prove negligence of the other party, then we may be able to help obtain some more lenient treatment from the insurer.

We provide online car insurance quotes.

Generally we are able to offer 2-3 quotes instantly and we will then follow up with you progressively by email to build up a picture of the options showing the different premiums and excesses.

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As we age insurers increasingly become concerned about our abilty to drive a car safely.

Especially over the age of 70 you will be asked for medical proof in support of your fitness to drive.

Interestingly, Australian statistics show that drivers over the age of 75 are actually safer than those aged 17-64!


If you or someone you know is having difficulty finding even third party insurance in their older age, do please reach out to us, we will only be too pleased to help.

Contact Robin Brown or Romi Gill on 2530 2530 crew@navigator-insurance.com for assistance.


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Navigator Insurance Brokers Ltd
Unit E, 8/F Golden Sun Centre
No. 59-67 Bonham Strand West
Sheung Wan, Hong Kong