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What is Car Insurance and what does it cover?
Motor Vehicle insurance is required by law in Hong Kong, and will provide you coverage from a number of different things. When you are insuring your vehicle you are able to choose two main types of cover. These are Comprehensive or Third party.
Third party insurance will cover you for any damage to property, or persons that you have caused. A third party policy will also provide cover for the loss of your vehicle resulting from a fire or theft.
A Comprehensive policy is basically third party insurance with the addition of an all risks clause, and will insure your vehicle for depreciation, wear and tear, and any mechanical breakdowns.
One major part of car insurance is the No Claims Discount (NCD). If during the course of a policy year you have not had any claims, then you are entitled to a premium discount during the next policy year. It is important to note that the NCD scale will vary between insurance companies. Typically a policyholder is entitled to 20% NCD for the first claim free year, and 10% every year after that, up to a maximum of 60% No claims discount total.
When calculating the premium for a motor vehicle policy an insurance company will typically take a number of factors into consideration including:
In some cases there may be additional factors that must be taken into consideration including the regular drivers of the vehicle (if they are underage or inexperienced), and the physical features of the vehicle (such as its age and whether it is a high performance vehicle).
When purchasing car insurance it is essential that you provide the insurance company with certain documents to ensure that the insurance policy is issued is a timely manner. These documents are;
• The Vehicle Registration Document (VRD); this must name you as the owner of the vehicle
• Copies of Drivers Licenses and Identity Cards; you will need these for anyone who is a named driver of the vehicle
• Proof of No Claims Discount; this must come from a previous insurer and state that you have a certain number of years with no claims.
• Signed Application Form; this is vital to ensuring a successful application.
