Shippers normally send out cargoes in advance whenever there are long holidays approaching. On such occasions, the cargoes would have to be stored in go-downs or warehouses for a longer period of time.

Mr. Chan has just encountered a similar situation in which his cargoes have to be stored at the warehouse for the Lunar New Year holidays. Mr. Chan would like to know if his cargo insurance will cover this extended period of time for storing the goods at the warehouse.

It would depend on which clause Mr. Chan’s cargo insurance is applying. For Institute Cargo Clauses (ICC) 1982 version, it states that the cargo insurance cover will commence “8.1…from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit…” This means that the cargo insurance would attach only after the goods leave the warehouse and continue on their journey. So for Mr. Chan’s case, if his cargo insurance applies this clause, his goods stored at the warehouse during the long holidays would not be covered.

Whereas for ICC 2009 version, it states that the cargo insurance cover will commence “8.1…from the time the subject-matter insured is first moved in the warehouse or at the place of storage (at the place named in the contract of insurance) for the purpose of the immediate loading into or onto the carrying vehicle or other conveyance for the commencement of transit, continues during the ordinary course of transit…” That means that the insurance would attach when the goods are moved from the factory to the warehouse. So if this clause applies to Mr. Chan’s cargo insurance, his goods stored at the warehouse during the Lunar New Year holidays would be covered.

Therefore, it is recommended that cargo owners to take out cargo insurance using ICC 2009 version so as to also cover the transition period occurring in the warehouse. In addition, if cargo owners foresee a longer period of storage time in the warehouse (i.e not immediately loading the cargoes to carrying vehicle) during special occasions, it is recommended to inform the insurer in advance to determine whether this extra period of time is covered or if there would be any coverage extension if applicable.

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Shippers normally mark up 10 percent on the full cost of the goods (“invoice value”) as the sum insured for cargo insurance to avoid under-insurance. It is a common, worldwide practice to cover unexpected expenses which may be incurred during transportation, for instance, extra storage fees due to delayed customs inspection or duty or tax or currency fluctuations. These expenses may be over and above the invoice value.

Mr. Chan, who is new to the trading industry, took out cargo insurance based on the invoice value. The goods were unfortunately detained for some reason, e.g. transshipment, for which he needed to pay extra storage fees for the period involved. In a case where cargo damage was found after the arrival of the cargo, Mr. Chan filed a claim with his insurance company for both the damage and the extra cost incurred. However, his insurance company declined the claim because the expenses were not included in the invoice value.

With cargo insurance, it is common to encounter unexpected risks leading to additional expenses during transportation. The 10 percent mark-up value is effective in dealing with these unexpected expenses.

If the shipper does not take out the 10 percent mark-up value, those unexpected expenses arising during the course of transit are not covered by cargo insurance. As a result, the shipper will need to bear the loss. In some special cases, the shipper may even take out insurance with a higher mark-up value to ensure sufficient coverage. The maximum mark-up value varies policy by policy and the premium for the mark-up value is non-refundable.

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Ms. Chan was admitted for abdominal pain with an oophorectomy and appendectomy done last month. The total cost incurred for Surgeon, Anaesthetist and Operation Theatre was HK$126,000. After discharge from hospital, Ms. Chan submitted her claim for hospital expenses to her medical insurance company.

In her plan, the maximum benefit limits for Surgeon Fee, Anesthetist Fee and Operation Theatre were HK$93,000, HK$26,000 and HK$26,000 respectively. The limits should have been able to cover all of Ms. Chan's medical expenses. However, the insurance company only reimbursed HK$96,000 of Ms. Chan’s operation expenses. Why couldn't Ms. Chan have her medical expenses fully reimbursed?

According to Ms. Chan’s medical insurance policy,

“If more than one surgical procedure is performed through one single incision, reimbursement for all such procedures, including that for surgeon fee, anaesthetist fee and operation theatre charges, shall not exceed the amount payable for the surgical procedure with the highest percentage of Surgical Schedule.”

Based on the Surgical Schedule, the maximum surgical benefit for oophorectomy was 85% and that for appendectomy was 50%. Details of the Surgeon Fee, Anaesthetist Fee and Operation Theatre Fee of the surgical procedures received by Ms. Chan were as follow:

According to the condition stated in the policy, Ms. Chan could only be reimbursed with the cost incurred for the surgical procedure that had the higher percentage of the Surgical Schedule. Therefore in Ms. Chan’s case, the surgical procedure cost of oophorectomy of HK96,000 could be reimbursed.

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“Marine Open Cover”, is an agreement between the insured and the insurance company. Under the agreement, the insured agrees to buy cargo insurance for all their cargoes whenever they have an obligation to insure and the insurer agrees to provide cargo protection for the insured at any time.

"Limit of Liability” is one of the agreed conditions under “Marine Open Cover” whereby the insured agrees that it is the maximum sum insured of the total value of the insured shipment(s) (usually applied to any one conveyance or any one location). This is an important condition for the insured as this “Limit of Liability” means that the insurance company is only liable for the shipment(s) for a sum not exceeded by this agreed limit.

If it becomes apparent that the actual shipment value may exceed the agreed limit, the insured must inform the insurance company immediately prior to transition and look for the insurer’s acceptance. If the insured fails to obtain acceptance from the insurer prior to the commencement of the voyage, and if a claim arises, this breach of condition may prejudice the insured’s right of compensation from the insurer.

Customers should declare their cargo value accurately and also to periodically review whether the agreed Limit of Liability is sufficient or not. If there is growth in business, resulting in the total value always exceeding the limit, it is important for the insured to always inform the insurance company in these circumstances and to ask for an increase in the limit to ensure the insured is always fully protected under their cargo policy.

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Ms. Lee had been ill for the whole of February. Western medicine did not work for her and she turned to Chinese medicine treatment. Finally, she recovered after a two-week course of treatment. She then filed a claim with her medical insurance company together with the prescription for Chinese medicine from the practitioner.

During claims assessment, the insurance company requested Ms. Lee to provide an official receipt as a supporting document. As the practitioner did not issue printed receipts, Ms. Lee could only provide a handwritten receipt. Ms. Lee’s company accepted the receipt and reimbursed her claim accordingly.

The government has implemented regulation since 2008 requiring Chinese medical practitioners to register in order to protect the interest of patients.

Many Chinese medical practitioners in Hong Kong operate on a very small scale or as a family business. Furthermore, some practitioners have still not registered even though the government regulation has been in force for years. In light of this, insured persons should only visit legally registered practitioners whose documents are eligible proof for filing a claim.

In any case, insured persons must submit both presciption(s) and official receipt(s) according to the Hong Kong Federation of Insurers as medical insurance operates on a reimbursement basis.

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The Lamma Island ferry tragedy raised concerns about the importance of Compulsory Third Party Risks Insurance of vessels both among the public and throughout the insurance industry.

In accordance with Hong Kong regulations, if a vessel carries less than 12 passengers, the third party liability insurance cover amount should be HK$1 million. For any commercial vessel that carries more than 12 passengers, the insurance cover amount should be at least HK$5 million. With regard to the ferry tragedy, the total insurance cover amount for the vessels involved - “Lamma IV” and “Sea Smooth” - should have been at least HK$10 million. But even this amount provides insufficient cover considering the number of casualties and injuries. In view of this, it is common for many ship-owners to join the International Group of P&I Clubs in an attempt to share the compensation risk.

P&I Clubs is a mutual insurance association that provides protection to its ship-owner members. The main business of P&I Clubs is to offer P&I Insurance (Protection and Indemnity insurance), which covers broader risks like third party liabilities, including the carrier’s liability to a cargo-owner for damage to cargo, a ship owner’s liability after a collision, environmental pollution and war risk insurance, etc. At the same time, members can also obtain professional services such as guarantees and expert advice from the Club. As P&I Clubs provide unlimited coverage for members’ vessels, there is a strict requirement for membership enrolment. Only ship owners with a sound reputation can become members and a premium is charged according to their past record.

These days, there is a total of 13 principal member clubs under International Group of P&I Clubs worldwide. Click here for more details.

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In February 2017, Ms. Ho purchased a hospital medical insurance plan with a maximum limit of HK$500,000 per year. In December 2017, she experienced back pain and was diagnosed with a prolapsed intervertebral disc. Her doctor advised that she might need an operation if her condition did not improve with medication. Anticipating the need for better protection in the future, Ms. Ho immediately upgraded her existing medical insurance plan upon renewal, with a higher maximum limit of HK$1,000,000 per year.

Unfortunately in March 2018, Ms. Ho experienced severe back pain again. She was admitted to hospital and an operation for the prolapsed intervertebral disc was performed. When Ms. Ho tried to claim her hospital expenses, she was informed by her insurance company that the maximum limit of hospital benefit payable would be HK$500,000.

Question:
Given that Ms. Ho had upgraded her medical insurance and had been paying a higher premium, why was the maximum benefit payable not the upgraded cover of HK$1,000,000?

Answer:
At the time Ms. Ho upgraded her policy, she had already been diagnosed as suffering from a prolapsed intervertebral disc. This means that her prolapsed intervertebral disc was considered to be a pre-existing illness, i.e. prior to the policy upgrade. As pre-existing illnesses are excluded in the medical insurance policy, the upgraded benefit was not applicable to Ms. Ho’s operation in March 2018. The insurance company therefore paid her claim according to her benefit limit before the upgrade of the plan.

However, Ms. Ho can still enjoy the upgraded benefit for other illnesses which occur after her policy upgrade.

As we grow older, the risk of having illness gets higher. It is recommended to take out a medical insurance policy with a higher benefit level at an earlier stage of life. This will ensure that there will be enough coverage during retirement.

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Mr. Wong purchased medical insurance in 2016 and had been regularly paying the premium on time since then. In 2017, during policy renewal, his insurance company notified him that the premium of his medical insurance plan would increase along with enhanced coverage.

Mr. Wong did not wish to pay the increased premium as he felt that there was no need for coverage enhancement. Given that the plan’s brochure stated “guaranteed renewal”, Mr. Wong requested to renew his plan according to the same terms – coverage and premium – when he first took out the policy. However, the insurance company declined his request.

What does “guaranteed renewal” mean with regard to medical insurance?

Very often, “guaranteed renewal” sounds like a renewal promise without any condition to the client. In fact, the meaning of “guaranteed renewal” is that it provides a renewal offer regardless of the client’s health condition, but, at the same time, the insurance company has the right to adjust the premium and terms and conditions of the plan.

In reality, given that medical expenses rise with inflation, the maximum benefits payable for medical insurance should be increased accordingly to ensure customers can enjoy adequate coverage.

Furthermore, depending on the insurance plan, premiums may also change when clients enter the next age band.

Hence, “guaranteed renewal” does not represent a promise that premiums or terms will remains unchanged during renewal.

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Mr. Leung hurt his right elbow while playing badminton. He consulted several doctors, received physiotherapy treatment, and then submitted claims for reimbursement of medical expenses under his medical policy.

Mr. Leung was able to claim most of his medical expenses. However, his Insurer refused to reimburse the medical expenses charged by a chiropractor. Mr. Leung did not understand this.

In general, medical insurance reimburses medical expenses incurred for consulting a “Registered Medical Practitioner” – that is, a practitioner qualified by a degree in Western medicine and legally registered under the Medical Registration Ordinance in Hong Kong. Unfortunately, chiropractors do not fulfill either of these criteria.

Unless specifically mentioned, chiropractic treatment expenses are usually not covered under medical insurance. Customers are advised to take into account whether special treatment (i.e. chiropractic treatment) coverage is required based on their lifestyle if they are interested in purchasing medical insurance. If, by any chance, that special treatment is required, it is recommended that the customer check carefully whether the special treatment is covered in the medical insurance plan he/she is thinking of buying during the purchase selection. Take MSIG’s Medisure Plus as an example - our Executive plan includes chiropractic treatment expenses for accidental injury to suit the protection needs of sporty customers like Mr. Leung.

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Miss Li was diagnosed with end stage chronic renal failure. After consulting her doctor, she decided to go for a kidney transplant and enrolled on the waiting list. She noticed that the waiting list was long and that she might need to wait several years for a suitable kidney.

While Miss Li was waiting for the kidney transplant, she had to undergo interim treatment such as regular renal dialysis. As the cost of renal dialysis is very high and treatment is long term, Miss Li started to worry about medical treatment costs becoming a financial burden.

Miss Li has a Critical Illness Insurance policy and believes that she can only claim for the cover after she has undergone the kidney transplant. After realising that she might have to wait for a significant amount of time for a suitable kidney, Miss Li now wonders whether she will be compensated under her policy for renal failure.

The fact is that some insurance companies will pay for end-stage renal failure even if a kidney transplant is not yet performed.

Take MSIG’s Critical Care 1.0 as an example. The policy covers end stage renal failure requiring regular renal dialysis or renal transplant. This means that as long as the insured’s condition is certified by a doctor as requiring transplant surgery for renal failure, the insured is covered even if he/she has not undergone the transplant surgery.

In Miss Li’s case, if she had taken out MSIG’s Critical Care 1.0, she would be entitled to coverage by the policy to subsidise the cost of renal dialysis treatment.

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