How to buy insurance for your second-hand car

Regarding the procedures of car inspection and test drive, you can refer to our previous article “What to look for when taking a test drive”.

As with what we have discussed in our previous article, many companies now support online price quotes. To obtain online quotes of motor insurance, buyers only need to ask for a copy of the Vehicle Registration Document from the seller and input the information online.

After confirming the price with the seller, you can ask the seller to go to the garage with you for car inspection. Remember that you should not pay the full deposit before car inspection. Instead, you can pay a small amount, such as $1,000 as earnest money.

The agreement should specify that: (1) the vehicle does not have any loans on it, and (2) it is not on installments. Finally, before the vehicle is transferred, you should ensure that the fine (if any) of the previous owner has been fully paid. If not, you will be responsible for the fine.

There are two forms of car insurance: namely comprehensive insurance and third-party insurance. 

Third-party insurance is the minimum insurance requirement according to the laws in Hong Kong, which only covers the policyholders against compensation claimed by third parties for bodily injury or property damage as a result of a traffic accident.

Comprehensive insurance, on the contrary, covers you, your vehicle, and third-parties with the option to select many more additional benefits.

Another noteworthy point is that, if you are aged under 25, or/and only hold a provisional driving license, the insurer may deem that you have a higher risk of running into traffic accidents due to the lack of experience, and may thus incur a higher premium. 

In addition, the excess, which is the amount you’ll need to pay out-of-pocket before lodging a claim to the insurer, varies with different insurance policies, so you should check the terms and conditions in your insurance policy thoroughly.

The buyer should prepare the following documents to secure car insurance:

• A copy of the Vehicle Registration Document
• Proof of identity of all drivers (Hong Kong Identity Card or passport)
• A copy of the driving license of all drivers

• Proof of no claims discount (if applicable)

Again, you can refer to our previous articles about "How to transfer the ownership of a car in Hong Kong?" for step-by-step guidance.

After the transfer of ownership, you can do a final inspection of the car, and pay the remaining balance to the seller with cash or a promissory note. If the seller concurs, you can also go to the bank together for fund transfer after the transfer of ownership.

You can select your coveted second-hand cars through online platforms or used car dealerships. You should pay attention to the year of manufacture (car age), how many times it has changed hands, mileage, license expiry date, and whether it needs any maintenance. Usually, the lower the number, the higher its value.

You should take note of how many times the car has changed hands. It should be ‘zero’ if the vehicle is registered in Hong Kong but no license has been issued; ‘one’ for vehicles that already have a car owner. As for mileage, normally it should be around 10,000 km - 15,000 km per year in Hong Kong. You should also opt for cars with original maintenance records so that you can call the manufacturer to inquire about the mileage when necessary. As for imported vehicles, it’s best to ensure the car has been registered in Hong Kong and avoid purchasing cars without imported documents and related information.