Get sufficient third‑party liability coverage: the mandatory insurance limits are uniform nationwide and relatively low, so any excess must be paid out of your own pocket

26. Get sufficient third‑party liability coverage: the mandatory insurance limits are uniform nationwide and relatively low, so any excess must be paid out of your own pocket

Cost: Commercial third‑party liability insurance costs a few hundred to a few thousand yuan per year. The higher the coverage amount you choose, the cheaper the premium becomes per unit of coverage.

In plain terms: When you’re at fault, the mandatory insurance pays out only up to three specific limits: 180,000 yuan for death or disability, 18,000 yuan for medical expenses, and 2,000 yuan for property damage. These amounts cannot be combined or transferred between categories. Compensation for injuries often exceeds these caps, and any shortfall must be paid by you personally; therefore, it’s essential to purchase enough commercial third‑party coverage.

Benefit: Nationwide, mandatory insurance enforces uniform liability limits. These limits are calculated separately for four categories: death or disability, medical costs, property damage, and compensation payable when you’re not at fault. Following the 2020 overhaul of auto insurance, the total maximum payout is now 200,000 yuan, broken down as 180,000 yuan for death/disability, 18,000 yuan for medical costs, and 2,000 yuan for property damage. When you’re not liable, the limits drop to 18,000 yuan for death/disability, 1,800 yuan for medical costs, and 100 yuan for property damage. Any amount above these caps must be borne by the responsible party; drivers lacking mandatory coverage face vehicle impoundment and a fine equal to twice the unpaid premium.

Evidence grade: A

Sources: State Council of China (revised in 2006, 2012). Regulations on Compulsory Motor Vehicle Traffic Accident Liability Insurance (State Council of China Order No. 462, revised by Order No. 618) Article 23: "Compulsory motor vehicle traffic accident liability insurance has unified liability limits nationwide. The liability limits are divided into death and disability compensation limits and medical expense compensation limits, The limit of compensation for property damage and the limit of compensation for which the insured is not responsible for road traffic accidents. "The limit of liability shall be stipulated by the China Insurance Regulatory Commission in conjunction with the State Council of China Ministry of Public Security, the State Council of China's health authorities, and the State Council of China's agriculture authorities. "Article 21 Compensation within the limit; Article 39 If the vehicle is not insured, the traffic management department of the public security organ shall impound the motor vehicle... and impose a fine of twice the insurance premium payable in accordance with the minimum liability limit." <http://www.gov.cn/gongbao/content/2012/content_2131962.htm>; China Banking and Insurance Regulatory Commission (2020). Guiding Opinions on Implementing Comprehensive Reform of Auto Insurance (Yinbao Jianfa [2020] No. 41, 4 (4): "Increase the total liability limit of compulsory traffic insurance from 122,000 yuan to 200,000 yuan, of which the death and disability compensation limit is increased from 110,000 yuan to 180,000 yuan, the medical expense compensation limit is increased from 10,000 yuan to 18,000 yuan, and the property loss compensation limit remains unchanged at 2,000 yuan"). <https://www.gov.cn/gongbao/content/2020/content_5567758.htm> (State Council of China Communiqué)

Notes: These limits are set by financial regulators and may be adjusted over time. The figures cited reflect current values after the September 2020 reforms; it’s advisable to verify them before purchasing a policy. Crucially, mandatory insurance pays out per category separately — unused portions cannot be applied toward other categories. Compensation claims often surpass these caps, leaving drivers personally liable for the remainder. While this guide does not prescribe an exact coverage amount, it highlights how a modest additional outlay can safeguard you against a scenario with low probability yet potentially devastating financial impact.