Traffic accidents totaled more than 25,000 in Hong Kong last year, some one-third involved private cars. Car owners can either abide by the law in purchase of the Third Party Bodily Injury or Death Insurance or the Third Party Property Damage Insurance and Comprehensive Car Insurance (Comprehensive Insurance), to provide necessary protection to both the motorists and road users in the event of accidents. But a Consumer Council survey has found premiums of comprehensive insurance in the market varied more than doubled, and variances existed also in premiums and policy terms among different sales channels. In addition, insurance plans may impose different types of excess and in various amounts. Consumers are urged to compare with great care.
The Council has inquired among 24 insurers that provide comprehensive insurance for private car and only 7 insurers responded with 10 insurance plans in total. Another 5 companies expressly declined to participate and 12 did not reply to the Council, among them, some provided relatively detailed plan descriptions on their websites. The Council collected 7 plans from 7 companies for comparison.
The levels of comprehensive insurance premiums depend on many different factors, for instance, brand, model, and market value of the car, driver age and experience, etc. The Council further found that purchasing through different channels – from the insurer directly or insurance intermediaries or online sales platform – resulted in different price quotations.
In the survey, Council staff assumed different profile of drivers and car models to obtain instant online price quotations of comprehensive insurance from various insurers. For instance, the prices quoted for the same profile of driver and car model could range nearly 1.4 times. As for theft loss excess of 1 car model, the difference between the highest and the lowest price quotes ($1,000 and $34,993) reached a whopping 33 times!
Besides premiums, consumers should also pay attention to the many types of excess and their terms and conditions. Some common excesses include theft loss, parking damage and third party property damage.
The survey has also discovered that online platforms generally do not provide instant price quotations for drivers younger than 25 or those with less than 2 years of driving experience. These drivers have to contact insurers' salespersons directly as most insurers surveyed have imposed additional excess for drivers with less driving experience.
With regard to the insured amount, the legislation requires a minimum insurance cover for death and injury of third party at $100 million. As for third party property damage protection, 17 insurance plans have set the upper limits from $2 million to $5 million.
Different plans also offer a range of additional covers. Consumers are advised to take heed of its limits and restrictions. For instance, most plans offer "new-for-old replacement" compensation for vehicles being stolen or damaged beyond repair. However, different insurance companies offer such compensation usually with different stringent restrictions such as the insured ought to be the first registered car owner, the accident should happen within 12 months after the car is first registered, the insured car's brand and model should be on sale in Hong Kong, leaving parallel imported cars possibly unprotected. Other options include windscreen protection, 24-hour emergency maintenance and towing service etc. all charged with different premiums and restrictions. Consumers should choose based on their own needs.
At the end of last year, car insurance scams were reported in Hong Kong that the tricksters impersonating insurance intermediaries with fake car insurance policies had cheated premium payments from several hundred people. Car owners are reminded to choose insurance intermediaries with caution or purchase directly from an insurance company. Consumers can check with the Insurance Agents Registration Board, the Hong Kong Confederation of Insurance Brokers, and Professional Insurance Brokers Association for membership registration to ascertain their identity. Upon receiving the policy information and documents, call the insurer's online account enquiry system or telephone hotline to check the authenticity of the policies as well as accuracy and completeness of information.
The Council reminds consumers that, when purchasing comprehensive insurance, never solely focus on policy premium and rely on information from one single source. They should enquire for price quotations and related insurance terms and conditions via various sales channels such as the online sales platform and sales hotline of the insurer, and insurance intermediaries. They should also compare in detail the coverage of different insurance policies, the exclusions, and the premium, etc. in choosing a plan that most suits their needs and requirements.
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