Do I need travel insurance for driving in a foreign country?

Before jetting off on your holiday or business trip, it’s important to first consider the risks of driving overseas. According to the World Health Organization, over 1.25 million people die from traffic accidents every year! Not only that, but anywhere between 20 and 50 million more people suffer from non-fatal traffic accident injuries. Even worse, around 90% of those deaths happen in low and middle income countries, even though they own 54% of the world’s vehicles.

While the chances of accidents happening are generally pretty slim, especially if driving in a developed country where roads are built to a very high standard, they do happen. Driving conditions in a foreign country can also be very different from what you’re used to in Hong Kong, e.g. if you’re going to a country that drives on the other side of the road (Taiwan, for example). With this in mind, making sure that you have the best protection possible overseas can quite literally save your life.

occur when you go overseas. But, will your travel insurance plan cover you if you get into a traffic accident abroad? Unless the policy lists traffic accidents under its exclusions section, in many cases travel insurance plans will cover personal injury caused by car accidents in a foreign country.

One thing to take note here, however, is the coverage limit. Travel plans usually have “plan levels”, with the cheaper levels featuring lower, sometimes insufficient coverage. Also keep in mind that, while buying a cheaper plan is no doubt tempting, it can lead to higher costs in the long run should you need to submit an expensive claim.

What about third party liabilities and car hire insurance excess?

There’s also third party liabilities (property damage and bodily injury to third parties) to consider. Liabilities to third parties caused by your rental car can be a bit of a grey area when it pertains to travel insurance. For instance, while some travel insurance (not all) plans cover third party liability costs, some travel insurers exclude third party liability cover if it’s caused by car accidents. As such, it’s definitely worth checking with your insurer or an established broker like Kwiksure before flying overseas.

Finally, some travel insurance plans may include cover for “car hire insurance excess”. While coverage limits for this benefit are often quite low in travel policies, this can be a very important benefit to have, as insurance coverage offered by rental car companies often include an excess, which is an amount that you will need to pay towards a claim out of pocket.

One thing to bear in mind here is that, geographically speaking, most Hong Kong car insurance policies are restricted to Hong Kong only. That said, those with a HK comprehensive car insurance plan and a Mainland Driving License may be entitled to cover of their own vehicle not only in HK, but also in part/all of China. Third party coverage, on the other hand, will no longer apply when your vehicle is outside of Hong Kong.

Unlike some comprehensive auto insurance plans in the US, for example, virtually all car insurance policies in Hong Kong will not cover rental cars overseas. However, some comprehensive and third party car insurance plans in HK offer car hire insurance excess coverage, which as mentioned above can come in handy.

As Hong Kong car insurance plans do not cover rental car accidents overseas, you are going to need to secure the relevant insurance in the country you’re visiting. Most reputable car rental agencies offer the following types of insurance:

Collision Damage Waiver (CDW)

Its main purpose is to ensure that, should you be involved in a collision, the rental company will not go after you for losses. That said, there will usually be an excess attached, and exclusions will apply. For example, CDW insurance will usually be void if you get into a car accident as a result of local traffic law violations.

Theft insurance

This is another important rental car insurance to have, as it ensures that the rental company will not go after you for losses should your rental car get stolen. Again, the renter will be responsible for paying any excess attached to the policy terms should vehicle theft occur.

Third party liability

As the name suggests, this covers liabilities to third parties for bodily injury, accidental death, and property damage.

Personal accident

This type of insurance protects the driver and their passengers in the event that they sustain injuries from a car accident.

Final advice

When hiring a car, we highly recommend going with a reputed, international car rental company. This is because sometimes, in a bid to save on costs, lesser known companies might offer rental car policies that do not fully fulfil a country’s legal car insurance requirements. One example of this is when a car rental business has only obtained private car insurance, but are offering their vehicle for hire (in which case they should have secured a commercial vehicle plan).

Another thing to take note of here is the importance of reading all your insurance documentation. Rental car insurance can sometimes have low limits, which is why it’s worth double checking exactly what you’re paying for in order to ensure that you get the best protection possible.

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