Mandatory Insurance in Hong Kong - third party insurance

Each country has their own set of mandatory insurance to keep individuals and groups safe and protected. Insurance is crucial to help individuals, businesses and the public from damage, loss and more. The government enforces four main mandatory insurance in Hong Kong.

Mandatory insurances in Hong Kong are policies that must be legally owned by either an individual or business to perform an activity/duty. Making an insurance compulsory is the best risk management to help deal with common accidents and protect victims. 

The public and businesses must respect the law and purchase the correct insurance before it is too late. But what are these insurances, and do you need them?

The article will highlight the four mandatory insurances in Hong Kong and point out the insurance that some professional regulatory bodies also make compulsory.

What Are the Four Mandatory Insurance in Hong Kong?

Third-Party Car Insurance

There are countless cars and bikes that cruise down the streets of Hong Kong. The city roads are relatively safe, but unfortunately, there are accidents daily. In fact, there were around 15,000 traffic accidents with people injured in 2022. Not every driver is safe, and some situations are unpredictable on the road.

When a driver causes an accident, they are liable for the damage, including personal and vehicle damage. The affected party is also known as the third party. Even the best drivers can be involved in accidents. Hence by Hong Kong law, every vehicle owner and driver needs insurance.

car insurance hk - motor insurance Hong Kong- motor vehicles insurance (third party risks) ordinance

Third-party car insurance, also known as motor insurance, is a top mandatory insurance in Hong Kong. The insurance covers policyholders when their car causes injuries or damages. Car insurance in Hong Kong will pay for the medical bill and damage of the third party.

Third-party car insurance is the bare minimum legally required, but the insurance will not cover the owner for car damage, fire damage or theft. We suggest purchasing a comprehensive plan that offers third-party cover plus own damage and theft cover. 

When all drivers have third-party insurance, every member of the city is protected from the costs that follow traffic & road accidents.

Boat Insurance 

Much like road risks, there are sea risks. Owning a boat may be less common than road vehicles, but thousands of boats and yachts are still all over Hong Kong. Unlike the road, the sea has no traffic lights or signs, resulting in more chances of accidents.

There is always a risk of boats crashing into other vessels or public property and injuring the public. These accidents could occur during docking or while navigating in the sea. In 2022, there were 265 accident cases within Hong Kong waters, which resulted in injuries and damages.

Yacht insurance- boat insurance - Hong Kong Marine Department

These accidents can lead to expensive bills for the affected party. Hence under the Merchant Shipping (Local Vessels) Ordinance, all local vessels are mandatorily required to be insured against third-party risks.

Boat insurance is a mandatory insurance in Hong Kong for all boat owners, no matter the size. The insurance is also known as yacht insurance for pleasure boat vessels. The compulsory insurance will cover the cost of third-party injuries and damage caused by the policyholder’s boat.

For a vessel that can accommodate more than 12 passengers, the Hong Kong Marine Department requires a minimum liability coverage of HK$10 million. Any vessel that carries under 12 passengers must have a minimum of HK$ 5 million. Insurance providers can customise the policy for the size of the boat and provide additional coverage.

Employee Compensation Insurance

Employers in Hong Kong have a duty to all their employees to ensure they are safe and covered. Hong Kong employers are liable if any employee suffers a work injury or illness while on duty. The employers can be a business or even a family that has employed a helper.

employee compensation - employee compensation ordinance - labour insurance

Employers must legally pay for medical bills, salary and compensation costs (if work-related). Under the employee compensation ordinance in Hong Kong, every employer must purchase employee compensation insurance. No employer can legally employ even a single employee without insurance.

The mandatory insurance in Hong Kong helps employers and employees with adequate protection for work-related injuries and illnesses. The limit of the cover depends on how many employees are in the business. For example, the labour department requires employers with 200 plus employees to have a minimum of HK$200 million cover and, if under 200, a HK$100 minimum.

Additionally, there is a separate employee insurance for helpers: domestic helper insurance. Domestic helper insurance provides a similar employee protection cover for the helper(s). Both insurances will pay for work injury medical expenses, salary and potential compensation pay-outs (if disabled). 

An employer who doesn’t comply with the Hong Kong employment regulations will receive a fine of HK$100,000 and imprisonment for two years.

Owner’s Corporations Management Liability Insurance 

Hong Kong has around 42,000 private buildings, each owned by an organisation. These buildings are full of people, either living or working. These organisations are responsible for almost everything that happens in the building, from repairs to accidental damage and injuries.

Owner's Corporations Management Liability Insurance - Building management ordinance 中文

There can be various accidents and damage in a building due to or in the property. Third-party accidents can include part of a building falling on someone or something or slip and fall claims. Injuries and damage caused by a building can be severe, and the owners will be liable.

For these reasons, the building management ordinance requires all building owners – organisations to have owner’s corporation management liability insurance. The policy is also known as building owner’s corporation third-party liability insurance.

Owner corporation liability policy is a mandatory insurance in Hong Kong for the safety of the public and organisation. The insurance will cover the building organisation’s legal liability against accidental third-party injury, death or damage that occurs at the common parts of the premise. According to the building management ordinance, the minimum policy cover must be HK$10,000,000

Industry Recommended Insurances (Regulatory Body)

The above insurances are the main mandatory insurance in Hong Kong regulated by the government. However, some industry/career regulatory bodies require specific insurance to work in Hong Kong. The insurance is typically liability insurance to help the professional and company in the industry.

The regulatory insurance requirements are not promoted as mandatory, but in a way, they are for professionals. Below is a list of industries/ professionals that require insurance to operate in Hong Kong.

Professional Indemnity Insurance protection HK

  • Law industry: Any professional and company working in the law industry as a lawyer need professional indemnity insurance. The insurance required by the Hong Kong Law Society.
  • Accounting Industry:  Professional indemnity insurance is necessary among accountants and CPAs to protect their liability from negligence or errors. The insurance is required by the Hong Kong Institute of Certified Public Accounts.
  • Insurance Industry: Insurance brokers and broking companies must also have professional liability insurance along with their licences. The insurance is required by the Hong Kong Insurance Authority.
  • Engineering Industry: Engineers and engineering companies in Hong Kong need professional indemnity insurance to cover their liability risks that follow with their service. The insurance is required by the Hong Kong Institution of Engineers.

The Benefits & Importance of Mandatory Insurance in Hong Kong

Mandatory insurance in Hong Kong is essential to help protect the country and the public. Even if there are unfortunate accidents, insurance will help cover the costs for the victim affected.

Insurance will protect the third-party damage and policyholder liability as long as the incident is not a fraud. Accidents are bound to happen no matter how safe a city is or how safe the people are.

It is important to understand that each country has its different mandatory insurance list, and when not obeyed, there are massive fines and penalties.

Additionally, many other personal and business insurances are not mandatory but are vital to get the best risk protection and cover financial loss. Having the right insurance can help businesses and individuals deal with various unforeseen incidents in the future.


To Learn More about personal insurance and business insurance and get the best protection in Hong Kong & Asia, contact Red Asia Insurance.