【Comprehensive vs Third-Party Car Insurance】Is comprehensive cover worth it? Which provider offers the best value?

Hong Kong once experienced a once-in-a-century rainstorm, with urban areas flooded like a vast expanse of water. Many vehicles were damaged beyond repair and written off (Total Loss). The law requires vehicle owners to purchase Third Party Liability Insurance (Third Party Insurance), but this insurance does not cover damage to their own vehicles. As a result, the rainstorm may have prompted many vehicle owners to consider purchasing Comprehensive Motor Insurance (Comprehensive Insurance). Comprehensive Insurance generally costs twice as much as Third Party Insurance, deterring many vehicle owners. However, it provides extensive coverage and can compensate for damage to their vehicles. In this article, 10Life compares Comprehensive Motor Insurance and Third Party Insurance available on the market, identifies affordable Comprehensive Insurance options, and examines whether the protection provided by Comprehensive Insurance offers good value for money.

The main difference between Comprehensive Insurance and Third Party Insurance lies in their scope of coverage. Third Party Insurance only covers third-party injury, death and property damage caused by an accident, whereas Comprehensive Insurance covers third parties, the vehicle owner and the vehicle itself. Table 1 sets out the main differences in the scope of coverage between the two.

Comprehensive cover not only includes third-party liability cover, but also covers expenses such as car repairs, towing and hiring a replacement vehicle, as well as medical expenses for injuries sustained by the owner and passengers. Its coverage is more extensive than third-party cover, so the premiums are naturally more expensive.

10Life obtained quotations from seven insurance companies offering car insurance in the market to compare the prices of comprehensive and third-party cover. This comparison uses a relatively popular family car as an example: a 2023 Honda Stepwgn with an engine capacity of 1,499c.c. and a vehicle value of HK$290,000. The policyholder is assumed to be 35 years old, works as a clerk, has 10 years of driving experience, has made no claims in the past three years, has a no-claims discount of NCB 60%, and has no record of traffic offences in the past five years.

As shown in Table 2, when comparing comprehensive and third-party cover from the seven insurance companies, the comprehensive cover offered by the same company is generally more than twice as expensive as third-party cover. Comprehensive cover costs more, but is the level of protection worth the price? Given the broad scope of comprehensive cover, Table 2 compares the areas of cover that differ most among the various comprehensive products.

When a policyholder has not made a claim due to an accident in the past year, the insurance company will offer a premium discount or reward upon renewal in the following year, known as the No Claims Bonus (NCB/NCD). As a result, many vehicle owners choose to settle compensation privately (commonly known as a private settlement) after an accident to avoid a substantial reduction in their NCB, which would lead to higher premiums upon renewal the following year.

Comprehensive motor insurance offers exclusive NCB protection, allowing vehicle owners to retain their NCB after making a claim. Provided that the claim does not exceed the specified limit, the NCB will not be reduced. Some plans also impose a limit based on the number of claims, whereby the NCB is only reduced after more than one claim is made. As shown in Table 2, under general motor insurance policies, the NCB will not be reduced provided that the total claim amount within one year does not exceed HK$60,000; some policies also stipulate that no more than one claim may be made.
Therefore, if a vehicle owner has only had their first accident during the policy year and the claim amount is not too substantial—for example, if the vehicle has only sustained minor scratches—they can certainly consider making a claim first.

Shortly after taking delivery of a new car, even a minor scratch can be extremely distressing for the owner, while water damage or a single-vehicle accident can be a nightmare. Most comprehensive policies include a “new-for-old” provision, allowing car owners to replace their vehicle with a new one.

If an accident occurs within the first year of purchasing a new car and the vehicle is written off, the policyholder can generally receive compensation for a new car of the same make and model, provided the specified requirements are met. However, if the vehicle is only partially damaged, the final compensation will still be calculated based on the vehicle’s depreciation.

A vehicle depreciates as its age increases, causing its value to fall. Except for new cars within their first year, compensation for other vehicles will also be calculated based on their depreciated value, rather than the price paid when the car was purchased. Therefore, if the vehicle is relatively old and has depreciated significantly, the compensation received after it is written off will be limited, making comprehensive cover relatively less worthwhile.

As with third-party insurance, comprehensive insurance also includes various excesses, meaning an amount that the vehicle owner must pay themselves when making a claim. As shown in Table 2, if the vehicle is unfortunately stolen, the relevant excess is generally between $5,000 and $11,250, after which the insurer will compensate the remaining amount.

If the vehicle is hit while parked, or is damaged in a self-inflicted accident caused by a momentary lapse in judgement, comprehensive insurance will likewise compensate for the relevant losses.

Comprehensive cover not only protects the vehicle, but also covers the medical expenses incurred if the owner or passengers are injured. As shown in Table 2, medical compensation is generally provided per policy year and per accident, with a maximum payout of $5,000 per accident. The highest annual compensation is offered by Bridge, at $20,000 per person.

If the vehicle needs to be towed to a repair centre, comprehensive cover also provides towing service protection, generally with a maximum payout of $2,000 per accident.

If your car is unfortunately damaged and needs to go to a garage for repairs, it may take a few days in minor cases, or even weeks in more serious cases. In addition to covering the repair costs of the insured car, comprehensive cover also compensates you for the cost of hiring a replacement car during the repair period, generally for 5 to 7 days, allowing the insured to continue to have a car to drive.

Another selling point of comprehensive cover is windscreen protection, which generally provides compensation of between $5,000 and $6,000, with replacement limited to once per policy year. For example, if your windscreen is cracked after being hit by a stone on a motorway, you may be able to have it replaced free of charge or with a subsidy.

In summary, comprehensive cover offers extensive protection, but its premiums are relatively higher than those of third-party insurance, so you should make more comparisons before taking out a policy. In addition to premiums, you should also compare the various excesses, as these will affect the final compensation received, and pay attention to NCB protection, which will affect the final premium.

Car owners should choose suitable car insurance according to their own needs. For example, comprehensive cover is mandatory when purchasing a car through financing, and may also be considered when buying a new car, in order to obtain all-round protection. However, if the vehicle purchased is relatively inexpensive, opting for third-party insurance alone is also a viable option. For points to note when buying third-party insurance, please refer to our other article: 【Online Third-Party Insurance Price Comparison】Car Insurance Premiums Can Differ by Nearly 1x: Explanation of Third-Party Insurance and Excesses

Note: This article was last updated on 22 January 2025.

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.