Commercial vehicle insurance in Hong Kong: What you need to know

Before we get into the nitty gritty details, we first need to define commercial vehicle insurance. As the name suggests, it is a type of car insurance policy that is needed to cover any vehicle primarily used for business purposes/needs (e.g. transporting goods). One of the only exceptions to this rule is if you are an employee and are using your own private car to drive to work. If that is the case, private auto insurance coverage is what you need.

Like private car insurance, there are two main types of commercial vehicle insurance:

• Third party: All vehicles in Hong Kong must at least have cover of at least HKD 100,000,000 against the liability to third parties for bodily injury or death. Despite it not being a legal requirement, virtually all auto insurance plans will also include third party cover for property damage.

• Comprehensive: This provides everything that third party policies cover, but with the addition of extra cover that sees damages to the business’ vehicle covered as well. Those in need of further cover can also purchase add-ons to ensure that you, your employees, your vehicle, and your business are fully protected.

One of the key differences between commercial vehicle insurance and private car insurance is in the coverage limits, namely the third party property damage limit. Private car insurance plans usually have a coverage limit of HKD 2,000,000, while commercial vehicle plans will have an annual limit of up to HKD 1,000,000.

If you find that this limit is too low, there are options available to increase the coverage maximum, but this will be subject to a premium increase. There are many reasons for why the property damage limit is lower for commercial vehicles, key among them being that the risk of incurring extensive damage is often greater with vehicles used for business purposes.

The No Claims Discount (NCD) limit is another key difference between commercial vehicle plans and car insurance policies in Hong Kong. While the maximum NCD for private car insurance cover is 60% - representing 5 years of claims-free driving, the maximum NCD applicable to commercial vehicle insurance premiums is only 30%.

Please also remember that NCDs can’t be transferred between commercial and private car insurance. This means that, if you have say a 60% NCD discount applied to your current private car insurance, you cannot transfer it over to your commercial policy.

Whether you’ve got a commercial car, van, light goods vehicle, or heavy duty truck, one important thing to remember here is that commercial vehicle insurance premiums will usually cost a ballpark percentage of around 50 percent more than private motor insurance.

This is because insurers see commercial vehicles as having an increased risk of getting into an accident. The higher premium may be due to the fact that commercial vehicles tend to be used on a more regular basis, and for longer hours than private cars (e.g. delivering goods or driving clients around all day).

As there are so many different types and uses of commercial vehicles, premiums for different business’ vehicles will differ immensely. Here, we look at two key factors that will likely have an impact on your premium:

What is the vehicle primarily used for?

This will be one of the first questions your insurer or broker will ask you. If there is a set route and activity your vehicle will be used for (e.g. an in-house van used only for delivering materials to your office/shop/unit), there is less that is “unknown”.

Compare this with a commercial lorry used to help multiple different customers move house every day. There is less that is “known” because locations will be different everyday, and there is no set driving route as it changes per customer/order. Because there are more unknown risks associated with the latter scenario, insurers will charge a higher premium to “make up” for the uncertainty.

Permitted gross vehicle weight

When registering your vehicle insurance policy, there will be a section labelled “permitted gross vehicle weight” (PGVW). This describes the maximum operating weight of your vehicle, taking into account the base curb weight plus the weight of additional accessories, cargo, and passengers. The general rule of thumb here is: the higher your PGVW, the more expensive your premium.

When operating your vehicle, it is crucial that you adhere to your PGVW. Vehicles should never be loaded beyond their permitted maximum weight, as a number of issues could arise. For one, if your car is too heavy (e.g. there are too many passengers or goods), it may have troubles braking effectively. Furthermore, if you were to file an insurance claim in such a situation, it would likely be rejected should the insurer find that your vehicle has exceeded your PGVW.

Depending on your business and the use of your commercial vehicle, you might also need additional coverage for further protection. For instance, a standard commercial vehicle insurance plan won’t cover damages and injuries caused by the use of a truck, van, or lorry’s tail lift.

The same goes for accidents involving properties or people getting hit by a toppling lorry crane when the vehicle is stationary. These unfortunate events, while not common, do happen, which is why securing additional operational insurance can help protect your business against a much wider range of liabilities.

Kwiksure has spent the past two decades helping thousands of businesses of all sizes and industries insure their vehicles with the best commercial vehicle insurance policies. Our experienced team is on hand to not only find you the right plan at the best price, but also to answer your questions, give you their impartial advice, and offer you a free comparison and quote. Contact Kwiksure today!