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Car insurance in china began with the People Insurance Company of China in the year 1950. This it did by the provision of local insurance policies and as such brought to a halt the foreign dominance of the insurance industry in China.  As times moved on, the people became more aware of  insurance and its imperativeness. And about the year 1980, car insurance in the country  grew along with the growth in the transport sector and as well as the growth in the acquisition of private cars among Chinese citizens.

Going further and in 1988, car insurance had dominated the non-life insurance sector and fast forward to 2006, the Chinese government made it compulsory that drivers of cars must buy the liability car insurance policies.

Therefore, car insurance in china belongs to the non-life insurance category. And has grown to the level that the industry has a growth economic value of about 834.5 RMB and equally a ten ((10%) yearly growth as well as its dominance of the non-life insurance market with over seventy (70%) of the premium received in the sector.


There a number of the types of car insurance in China as some of them include;

  1. Compulsory liability car insurance for road traffic accidents
  2. Commercial car insurance
  3. Gap car insurance
  4. Collateral car insurance


This is the type of car insurance policy in china used to cover the incidence of third party accidents resulting in injuries and/or deaths in extreme cases. In order words, this policy provides indemnity that will be capable of taking care of the repairs of third party cars as well as injuries sustained in the event of car accidents in China.

This type of car insurance in china is compulsory for both the private and commercial car owners. The cost of premium for this type of insurance policy largely depends on the type of car in question, the age of the car, the level of experience of other, the market value and other connected factors. It is noteworthy to state here that the coverage afforded by this type of policy is one arising from traffic collisions.


This type of car insurance policy in China offers a wider  coverage than the aforementioned compulsory liability car insurance policy in china. The financial insurance protection from this class of policy includes items such as natural disasters or acts of God, theft, keying as well as damages as a result of collision with static objects.

It is noteworthy to mention that there are two types of commercial motor insurance in China and they include;

  1. Basic risks commercial car insurance in China and
  2. Additional risks commercial car insurance in China

Basic Risks Commercial Car 

To be able to subscribe to additional risks policy in china, you will have to buy the basic risks policy. The components of the basic risks policy includes;

Damage of car insurance in china

This type of basic risks car insurance policy In china will provide protection to the policyholder for all car damages not minding the cause of such damage.

Theft coverage

This is the type of coverage provision in case of theft or burglary

Passengers insurance

This is the type of basic car insurance policy that offers insurance coverage for all the passenger of a car. This policy is bought having the number of car seats in mind. In other words, the insurance policy cannot be less than the number of the seats the car possesses.

Quota-free basic insurance policy

This is the class of basic car insurance policy in china that pays the complete compensation for damages arising from accidents. This policy pays one hundred per cent(100%) of the compensation due to the policyholder notwithstanding the party who is at fault.

The Additional Risk Coverage of car insurance in china

The coverage for the additional risk coverage includes

Risk of combustion coverage

This is the type of additional coverage that provides protection and eventual compensation in the event of loss of the car combustion as a result of the failure of the electrical components of the car such as the wiring as well as the fuel supply channel.

Free compensation additional insurance

Here, the insurance company will compensate the policyholder on the basis of the rate contained basic insurance clause as well as the liability limit and in accordance with the amount of the deductible.


What this class of car insurance policy in China covers is the gap between what is covered by your policy and the amount you bought your insured car of the market value of your car. In other words, this is the difference between the amount the insurance company s willing to indemnify you with and the market value of your car.

When you purchase gap car insurance , you will be entitle to compensation to the amount of the total market value of your car in the event it is completely damages or destroyed. Therefore, if you do not have gap car insurance , the insurance company will only be compelled to pay the amount of the depreciated value of the car as opposed to the current market value.


Most times, people use their cars as collateral to obtain loans from banks in China. These policyholders who have used their cars as collaterals purchase the collateral coverage. This is to provide protection in the event the policyholder cannot pay their debts and the car’s current value cannot offset the present value of the car as well as the accumulated interests of the loans.

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