Motor Insurance: Third Party or Comprehensive?

Motor Insurance: Third Party or Comprehensive?

Those looking to own a car might focus on the cost of the vehicle, registration, and parking, but they should also pay attention to motor insurance, which take the forms of third party versus comprehensive cover. Are you clear on their differences? Which one is more appropriate for your needs?

The law in Hong Kong* requires the vehicle owner to purchase third party liability insurance as basic protection. In the event of an accident for which the vehicle owner is liable, the third party insurance would provide compensation for death, bodily injury and property damage suffered by the third party.

Comprehensive motor insurance, on the other hand, provides a fuller range of protection. Coverage not only includes third party liability, but also provides compensation to the insured for loss arising from traffic accidents, floods, fire or theft. The medical and personal accident cover under comprehensive insurance would also provide compensation for death or bodily injury suffered by the insured from a car accident. Naturally, the premium for comprehensive insurance is higher than third party insurance.

Some comprehensive insurance plans available in the market also offer additional protection and assistance to the insured, such as ‘New for Old’ replacement vehicle within a specified period, windscreen damage cover, emergency vehicle assistance including free towing. Since windscreen damage is the most common claim item, some insurance companies have introduced a waiver for windscreen damage. After the insured has informed the insurance company of windscreen damage, the insured will be directed to a designated repair centre or the repair centre will dispatch a technician to the parking location of the vehicle. All you need is your driving license or vehicle registration document. Not only are there no fees involved, the process is convenient and time-saving.

Most comprehensive insurance plans provide No Claims Discount (NCD), which means a discount on premium would be offered if the insured had not submitted any claim over a specified period. Some insurance companies provide even more flexibility by offering the same NCD even if the insured had submitted one claim under a specified amount during the previous year.

Car owners who wish to provide the most comprehensive protection for yourselves and your beloved vehicles should remember to purchase not only third party insurance, but also comprehensive insurance that best fits your needs.

* According to section 4 under Cap. 272 of the Motor Vehicles Insurance (Third Party Risks) Ordinance, it is not lawful for any person to use, or to cause or permit any other person to use, a motor vehicle on a road unless there is in force third party insurance. Anyone who acts in contravention of this section is liable to a fine of $10,000 and to imprisonment for 12 months.

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