If you own a car, or plan on buying one in Hong Kong you likely already know that you must purchase car insurance for your vehicle before you are legally allowed to drive it in the city. The thing is, when you start looking at plans you will likely come to find that there is a fairly wide variance in premiums. To help, we have created this article which focuses on how car insurance premiums are calculated in Hong Kong.
Before we look into the different factors insurers will consider it is important to note that there is no set calculation that must be used by all insurers when offering motor insurance plans. Rather, insurers will price their plans utilizing a wide variety of factors.
Because every business is different, there will be external factors that have an impact on what they charge for insurance. For example, the number of claims submitted vs paid out, goals of the company, and competition all have a varying impact on the price. That said, there are a number of factors used by all insurers. Here we will look at eight common factors that insurers will use when quoting a price for car insurance in Hong Kong.
The size of your car's engine
As you likely know, cars of the same make will come in different models, often with more expensive models having a bigger engine among other things. As such, one of the first questions you will be asked when you talk with Kwiksure or an insurer will be the size of the engine (usually in cubic centimeters, or cc).
Simply put, the bigger the engine the faster you can go. This means there is a higher risk of an accident and a higher cost to replace parts after an accident. Therefore, insurers will generally quote a higher premium for a vehicle with a bigger engine.
In other words, if you are considering that sleek BMW M760i (which comes with a 6,592cc v12 engine), know that you will be paying considerably more for insurance than say a BMW 740 Li which has a V6 engine and about half the total engine capacity.
Your driving history
Aside from the type of car you want to insure, this is arguably the most important factor influencing how car insurance premiums are calculated in Hong Kong. If you do not have a clean driving history e.g., a high number of demerit points or a history of accidents/serious driving offences you will pay more for insurance.
Insurers will want to know whether you have had any accidents or submitted any claims in the past three years. Many will also ask if you have been convicted of a serious driving offence (e.g., careless driving, dangerous driving, or drunk driving) or have accrued more than 8 demerit points in the same time period.
If you have had any of the above, then you will be paying more for your insurance.
It's not just your driving history in terms of accidents and tickets that insurers will consider. In fact, they will also look at how long you have been driving and even your age. If you are a new driver or are under the age of 21 to 25 (depending on the insurer) you will pay more for insurance.
The reason for this is newer drivers tend to have a higher risk of being in an accident. Unfortunately, there is usually little you can do about this but try to be a safe driver.
