At present, insurers are adopting a wait-and-see approach, closely monitoring the government’s policy direction on ride-hailing services before deciding whether to develop related insurance products. Some insurers have already begun preliminary research. For example, they are conducting early analysis on one of the key requirements—“holding third-party liability insurance that covers ride-hailing use.”
A preliminary concept being considered is to underwrite such coverage under a “commercial vehicle policy.” However, currently there are significant differences between commercial vehicle policies and private car policies, including, for example:
Coverage Limits
Under current Hong Kong law, all vehicles on the road must carry third-party liability (bodily injury) coverage of no less than HKD 100 million. This requirement applies to both commercial and private vehicles. However, the law does not have any requirement for third-party property damage coverage.
In general, existing private car third-party insurance policies provide property damage coverage starting from HKD 2 million. By contrast, commercial vehicle policies in the market usually offer third-party property damage coverage in the range of HKD 750,000 to HKD 1 million, which is noticeably lower than that for private car policies.
Both private and commercial vehicle owners can increase their coverage limits based on individual needs by paying additional premiums. If private car owners switch to a commercial vehicle policy due to ride-hailing use, this difference in coverage is an important factor to consider.
Additional Benefits
Comprehensive private car insurance policies typically provide a range of additional benefits to policyholders, such as 24-hour emergency assistance, windscreen replacement, no-claims discount protection, personal accident coverage, and lost key protection.
In contrast, comprehensive commercial vehicle insurance policies generally do not offer these additional benefits. Therefore, ride-hailing drivers who switch to commercial vehicle insurance should pay close attention to these differences in coverage.
No Claims Discount (NCD)
If a vehicle owner maintains a claim-free record for six consecutive years, they can enjoy a No Claims Discount (NCD) of up to 60% with their private car insurance. Most car owners highly value the NCD they have accumulated over the years, which is understandable, as it is a key factor directly affecting premium levels.
For commercial vehicle insurance, there are generally two ways to calculate NCD. The first is similar to private car insurance, with a maximum discount of 60%, as seen in taxi insurance. However, due to the relatively high claims ratio in the taxi sector, insurers may apply a “minimum premium” approach, meaning that premiums tend to be relatively uniform regardless of the NCD level.
The second method offers a maximum NCD of 30% after three consecutive claim-free years, which is commonly applied to vehicles such as vans and light trucks.
For ride-hailing drivers switching to commercial vehicle insurance, some key questions arise: can the NCD accumulated under a private car policy be fully transferred to a commercial vehicle policy? If so, will a similar “minimum premium” structure—like that used in taxi insurance—also apply?
Premiums
Taking third-party insurance as an example, the average annual premium for taxis ranges from HKD 30,000 to HKD 40,000, while general commercial vehicles such as vans typically cost around HKD 7,000 to HKD 10,000. In contrast, private car premiums average between HKD 2,000 and HKD 3,000. The differences in premiums are significant.
If ride-hailing vehicles are required to be insured under commercial vehicle policies, should the premium benchmark be based on taxi insurance rates, or on those of general commercial vehicles (such as vans)? This will undoubtedly be one of the most important factors affecting the operating costs of ride-hailing services.
Deductibles
At present, both private car and commercial vehicle insurance policies include a deductible clause. In simple terms, a deductible is the amount that the policyholder (or driver) must bear out of pocket when making a claim.
Generally, deductibles under commercial vehicle policies are higher than those for private cars. This is understandable, as commercial vehicles are typically on the road more often and therefore have a higher accident risk.
Looking ahead, should ride-hailing commercial insurance policies adopt tiered deductibles—for example, distinguishing between accidents that occur during active service and those that occur during personal use? Would such an approach better reflect the actual insurance needs of ride-hailing operations?
Other Considerations
Beyond the insurance terms, coverage scope, and premiums discussed above, there are further questions that arise about policy design. For example, with the “fixed driver–vehicle pairing” requirement for ride-hailing, should the corresponding commercial vehicle policy adopt a “named driver only” clause? If so, could this help reduce premium levels?
At the same time, how should such a “named driver” clause be applied during private use? As industry discussions and ongoing consultations with the government continue, the framework for ride-hailing insurance is expected to become clearer.
