The HKSAR Government implemented the “Northbound Travel for Hong Kong Vehicles” (“the Scheme”) in July, which not only introduces a new way for Hong Kong people to travel northwards on self-drive tours in Guangdong Province, but also facilitates further integration of the residents in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and realisation of the one-hour living circle among its cities. As the application threshold is not too high, the Scheme has been very well received by the public since its launch.
However, there are major differences in the statutory requirements on motor insurance between the Mainland and Hong Kong. The “Compulsory Traffic Accident Liability Insurance for Motor Vehicles” (“Compulsory Insurance”) in the Mainland, with a smaller coverage both in scope and amount, covers only third party personal injury and property loss, and compensation ceiling for each accident is only RMB200,000, which is a far cry from the HK$100 million third party liability coverage required by Hong Kong’s legislation for motor insurance. The Consumer Council reminds the public to be cautious in taking out motor insurance policies of minimal coverage, albeit legally compliant, just because of the cheaper premiums, as policyholders will be at great risk of inadequate liability protection if involved in an accident. Consumers are advised to take out an extra “Commercial Insurance for Motor Vehicles” (“Commercial Insurance”) on top of the statutory Compulsory Insurance in the Mainland.
To help consumers compare options for top-ups of Mainland motor insurance to their existing Hong Kong motor insurance policies, the Council has collected information on 18 Hong Kong insurance companies that offer such “Unilateral Recognition” insurance products. Apart from varying quotation methods and requirements among most of these insurance companies, the premiums quoted by 8 insurance companies for Commercial Insurance were also found to vary significantly from a few hundred Hong Kong dollars to over HK$3,000 depending on the amount of coverage. The Council reminds consumers to pay heed to different policies’ terms and conditions, and the scope and amount of coverage, and make careful choices according to their own needs.
Statutory “Compulsory Insurance” Provides Limited Coverage
Better Protection with “Commercial Insurance” Top-up
Driving in the Mainland requires taking out a Compulsory Insurance in accordance with the Road Traffic Safety Law of the People’s Republic of China and the Regulation on Compulsory Traffic Accident Liability Insurance for Motor Vehicles. Although Mainland statutory requirements are sufficiently met by taking out a Compulsory Insurance policy, it only covers third party personal injury and property loss but not persons on board. In addition, the compensation ceiling per accident of RMB200,000, the minimum requirement of Mainland statutory insurance, may not be sufficient to cover full liability in case of an accident. Therefore, it is advisable to top up with a Commercial Insurance policy to strengthen protection. Commercial Insurance is applicable to additional protection beyond the Mainland’s minimum statutory requirements, including third party liability and compensation to persons on board the insured vehicle. In short, it extends the scope of coverage to beyond that covered by the Compulsory Insurance. The coverage can range from RMB 1 million to 10 million, and from RMB10,000 to RMB200,000 respectively. Consumers can decide based on their own adversity to risk when considering taking out additional insurance.
There are 3 channels for applicants of the Scheme to procure Mainland motor insurance, including taking out “Unilateral Recognition” insurance products from Hong Kong insurance companies, taking out insurance policies with Mainland insurance companies directly, or taking out policies with Mainland insurance companies through one-stop services provided by Hong Kong insurance companies. Under the Unilateral Recognition policy, applicants can add a Unilateral Recognition insurance policy, equivalent to the Mainland’s Compulsory Insurance, to their vehicles’ Hong Kong statutory motor insurance policy within the validity period. An extra Commercial Insurance policy can also be added if necessary. The consolidated policy is issued by an individual Hong Kong insurance company, with the benefit of saving the applicant from taking out separate policies on both sides of the boundary.
Huge Variance in “Unilateral Recognition” Insurance Premiums
Different Claim Support for Different Regions
At present, there are 18 Hong Kong insurance companies offering Unilateral Recognition insurance products. To better understand product details, the Council collected relevant information through their websites and hotlines in September and October this year. The exercise revealed inadequate transparency in the information provided by insurance companies, while practices in premium information disclosure also varied, with only 5 companies releasing motor insurance premium tables on their websites. Some insurance companies only provided quotations to existing motor insurance customers, or required new customers to submit information such as vehicle details, driver experience, or even documentation such as their identity card, Mainland Travel Permit, and driving licence, etc., along with a completed application form before providing premium information. Such cumbersome and complicated procedures make it difficult for consumers to make comparisons.
The Council successfully obtained quotations from 8 insurance companies based on the example of a 2019 seven-passenger vehicle with a cylinder capacity of around 2,500cc, and a driver engaged in clerical work with over 5 years of driving experience, 60% no-claim discount and no driving offence points record. According to the quotations, the premiums varied greatly, and annual premiums for Unilateral Recognition insurance policies equivalent to the Mainland’s Compulsory Insurance ranged from HK$959 to HK$1,320, whereas premiums for “Commercial Insurance – Third Party Liability” with an insured amount of RMB 1 million to 10 million ranged from HK$974 to HK$3,019. Consumers should note that coverage provided by “Commercial Insurance – Liability Insurance for Persons Onboard Motor Vehicles” was relatively lower, ranging from RMB10,000 to 200,000, while premiums ranged from HK$165 to HK$3,269, meaning that in the event of injuries to any person in the vehicle, the driver would have to bear a significant liability.
Policyholders should also note that at present, Unilateral Recognition insurance policy which is equivalent to the Compulsory Insurance, and Commercial Insurance have to be purchased from the same insurance company where they have taken out their existing motor insurance policy. Although the Unilateral Recognition insurance policy is issued by a Hong Kong insurance company, in the event of an accident in the Mainland, in accordance with territoriality principle, the claim would be handled by the Mainland branch of the Hong Kong insurance company, their Mainland partner insurance company, or claims handling organisations in the Mainland, so consumers should be mindful of the background and network coverage of the relevant Mainland insurance companies. Furthermore, 5 Hong Kong insurance companies proactively expressed that assistance would be provided to the insured person after their return to Hong Kong. Consumers are advised to scrutinise the details of insurance policies and consider their knowledge of Mainland insurance and personal considerations before deciding to take out a policy.
Consumers should pay heed to the following before applying for the Scheme:
- Applicants should ensure that their applications are submitted through the Transport Department’s dedicated website for “Northbound Travel for Hong Kong Vehicles” (www.hzmbqfs.gov.hk), and access the relevant Mainland online platforms through this dedicated website to complete the application procedures, so as to prevent landing on fraudulent websites. Applicants should note that Mainland authorities will not require payment of any fees or credit card information online;
- In addition to taking out statutory motor insurance that meets Mainland requirements, consumers are advised to take out additional Commercial Insurance for protection of persons on board, and to increase coverage of third party liability;
- Ensure that the validity periods of the Hong Kong “Closed Road Permit” and the electronic vehicle licence by the Mainland authorities are aligned with the Compulsory Insurance or Unilateral Recognition policies;
- The Council suggests drivers to learn about the necessary considerations for driving in the Mainland beforehand, including traffic rules, driving habits, and ways to handle accidents, etc. Draw up driving routes and pay attention to traffic conditions before departure;
- Electric vehicle (EV) drivers should note that as connectors for Hong Kong cars are not compatible with the charging equipment in the Mainland, they must be equipped with suitable equipment such as adapters and other accessories, while drivers should also pay attention to whether such equipment is suitable for outdoor use. In addition, as there are fewer charging stations in Guangdong cities such as Guangzhou, Shenzhen and Zhuhai, drivers are advised to plan their journeys and ascertain locations of charging stations along the way before setting off.
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