If you’re going to drive a car in China, you’re going to need some form of car insurance – as with many other countries, China requires all drivers to be insured to a minimum standard before driving.. Here’s an introduction to the types of cover on offer.
Traffic compulsory insurance
Traffic compulsory insurance covers third-party liability (ie. cover in the event of an accident causing injury or death of another person, excluding the driver holding the policy and passengers in their vehicle). Financial compensation for the third party is also covered, though limited. The driver holding the policy is not insured for damage to their own car, or for injury to themselves.
Many drivers will also buy a separate third-party liability insurance policy. These policies are similar to traffic compulsory insurance – again, neither the driver holding the policy nor their passengers are insured. The key difference is that these policies allow drivers to choose their own desired maximum rate of compensation (some much higher than the limit available under traffic compulsory insurance).
Drivers can also add a number of extra types of cover. Some of these get quite obscure, but among the most popular are:
Vehicle damage insurance, covering damage to the policy-holder’s vehicle.
Passenger insurance, sold by the seat and covering injuries to, or death of, the policy holder’s passengers.
Driver insurance, covering injury to the driver and policy holder.
Theft insurance, covering theft not only of the vehicle but of all objects contained inside.
Quota-free insurance. Under traffic compulsory insurance, if the policy holder is held responsible for an accident, they must pay 20 percent of the compensation themselves (ie. the insurance company will only cover 80 percent of the compensation). With a quota-free insurance policy, the insurance company will pay 100 percent of the compensation, no matter who is held responsible for the accident.