Kwiksure’s General Manager shares car insurance tips at memehk.com live show

One of the first topics addressed in this week’s memehk.com show was the hot issue of electric vehicles (EVs) and car insurance. Electric car ownership continues to soar in popularity in Hong Kong, with 11,103 vehicles currently registered for road use (as of February 2018) - up from less than 100 in 2010.

One key point that was highlighted in the live broadcast is the issue of fast-rising electric car insurance premiums. We’ve also discussed this in detail in a recent blog post on Teslas and - long story short - the high reimbursement cost associated with EV repairs, coupled with the surge in purchases of electric cars in the city, has played a significant role in driving up car insurance premiums.

Another key segment of the live show focused on why car insurance is necessary in HK. Ken explained that, like in virtually all other countries, car insurance is compulsory here; the minimum level of coverage must be HKD 100,000,000 for any one event resulting in third party (including passengers) bodily injury/death. While not a legal requirement, the most basic policies here will also provide HKD 2,000,000 towards covering third party property damage (e.g. damaged vehicles, lamp posts, buildings).

As one of the most important car insurance tips shared on the show, Ken emphasized the importance of paying attention to coverage limits. In particular, the minimum level of third party coverage may not be sufficient should a policyholder become involved in an accident involving damage to expensive cars (e.g. HKD 2,000,000 may barely cover the repair costs of a Ferrari), or costly bodily injuries to pedestrians/passengers (e.g. compensation for loss of income as a result of severe injury).

In Hong Kong, there are two main types of car insurance: third party, and comprehensive. Simply put, third party plans cover bodily injury and death to third parties, as well as third party property damage. Comprehensive car insurance, on the other hand, covers all these items, but with a very important addition: the insured’s own vehicle. As such, comprehensive plans tend to be more expensive than their third party counterparts, but can present better value in the long run (i.e. were the policyholder to get into a costly accident).

There’s no black and white answer to this question, as the ideal type of motor insurance will depend on the driver’s specific circumstances. For example, if your car is worth less than HKD 50,000, then it might not be worth securing a costly comprehensive car insurance plan, as its repair/replacement costs are likely manageable without insurance.

In contrast, if your ride’s value is over, say, HKD 100,000, it makes more sense to secure comprehensive protection. It’s also important to compare premiums, and make sure that you’re not being overcharged for motor insurance. Ken’s personal rule of thumb when advising clients is drivers should try to aim for premiums that do not exceed 3 percent of their vehicle’s value.

The term ‘P License’ is short for Provisional Driving License, which a driver must apply for upon passing their driving test (learn more about P License and insurance here). The short answer to the question, “Can I buy motor insurance if I have a P License?”, is yes. Please bear in mind, however, that car insurance cover for drivers with P License tends to be more expensive, primarily due to the insurer’s assumption that P License holders are less experienced drivers. Also, while P License coverage is allowed for most vehicles, insurers may refuse to offer coverage for cars that are considered very difficult to drive.