A driver’s lifeline: motor insurance
Staged-collision scams have become a prominent public concern in Hong Kong, particularly among motorists. Fraudsters often pursue civil claims against drivers or passengers some time after minor collisions – or even if there wasn’t any physical contact – seeking compensation for medical expenses, loss of earnings and substantial legal fees. Demands can run into hundreds of thousands of Hong Kong dollars, with ever-more sophisticated methods that can catch motorists unawares.
To reduce the risk of falling victim to these “shadow-accident” schemes and to alleviate the financial and emotional burden that road incidents can bring, taking out motor insurance is a prudent step for every vehicle owner.
Steps to take after an incident
Most insurers operate a No Claims Discount (NCD) scheme to reward careful driving. Policyholders who have not made any claims in the preceding year are entitled to a premium discount on renewal. The discount increases with each claim-free year and is commonly between 20% and 60%.
However, you should never settle privately with the other driver after a traffic accident because of worries over losing your NCD or facing a premium rise. Under the law, the limitation period for civil claims involving personal injury is up to 3 years, and for property damage it is up to 6 years; a private settlement does not necessarily mean the matter is concluded. Even if you believe you are not at fault or the incident seems minor, the correct course of action is to report it to the police immediately. If the collision appears trivial and the other party offers to settle on the spot, note down their registration number, phone number and insurance details in case verification is required later. You should also notify your insurer promptly and retain dashcam footage for at least 3 years as important evidence.
Above all, do not admit liability or sign any settlement agreement before seeking professional advice. Instead, entrust the case to your insurer's specialist team to represent you in negotiations with the other party, assess the validity of the claim and contest any suspicious demands, thereby safeguarding your interests.
Cross-border cover for Hong Kong-registered vehicles
To accommodate Hong Kong drivers travelling via the Hong Kong-Zhuhai-Macao Bridge into Guangdong province, some insurers now offer cross-border motor insurance specifically for such journeys. These plans typically include Cross-Border Motor Vehicle Insurance, covering medical expenses, property damage and death/disability benefits, providing policyholders with fundamental and essential protection. Policyholders can also enhance their cover with optional add-ons, such as third-party liability and passengers’ liability insurance, to better meet individual needs and cope with a wider range of contingencies when driving across the border.
If an accident occurs on the Mainland section of the Hong Kong–Zhuhai–Macao Bridge, drivers should, once it is safe to do so, call the Bridge’s Authority Control and Dispatch Centre to arrange assistance and notify their insurer, following the instructions of both the rescue personnel and their insurer. For accidents on Guangdong highways or urban roads, drivers should report it to the police and contact their insurer immediately.
Key considerations
Insurers determine premiums based on multiple factors, including the policyholder’s age, driving experience, occupation and applicable NCD, as well as vehicle make, age and market value. When choosing cover, therefore, we should not only look at the sum insured but also carefully review the exclusions, alongside the excesses applicable to various sections of cover. For example, self-damage, theft or third-party property-damage. A thorough understanding of these provisions will help you select motor insurance that best matches your actual needs and driving habits.
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This Chinese version of this article was published in the Hong Kong Economics Journal
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