Home Insurance in Hong Kong: A guide
Homes are expensive in Hong Kong. Just recently, one of the smallest flats on Hong Kong Island – coming in at a whopping 163 square feet in size – sold for nearly HKD 4 million. With such an investment needed to obtain a little personal space for yourself in the city, it should come as no surprise that some people will want to do what they can to protect that investment. And this is not only true for a home itself, but also the personal possessions inside it as well. This is where the various types of insurance out there that can provide protection for your personal property come in. Here, we go in depth about Home Insurance, its features, and other things you should know.
Why is it so important to have Home Insurance?
Well, if you have a mortgage and your home burns down, without insurance you will still be on the hook for the full value of your home to the bank. For this reason, mortgages issued for the purchase homes in Hong Kong will include a stipulation that Home Insurance must be possessed by the home-owner, or else they will be in breach of the mortgage terms. Even if you do own your home outright, the amount of loss that every person can potentially rack up, both monetary and sentimental, when their home is damaged or invaded can be staggering. For this reason alone, Home Insurance is a must for every home owner.
Types of Home Insurance
There is not just a ‘one size fits all’ Home Insurance plan that will perfectly fit every person’s needs. In fact, insurance options employed in protecting a home will often combine a number of different coverages in order to address an owner’s specific concerns, or the specific risks that are more likely to be relevant given the location of the property. Here are a few:
- Buildings/Dwelling Insurance: This is the most basic type of Home Insurance. This type of plan covers the physical structure of your home, as well as the permanent structures within, such as bathroom fixtures or kitchen cabinets. It also can include coverage for outdoor buildings like a garage or shed.
- Contents Insurance: This type of insurance covers just about everything in your house that is not covered by Building Insurance. This includes appliances, furniture and all sorts of other belongings, even clothes. When purchasing Contents Insurance, it is a good idea to inform your insurer about any particularly valuable items or collections that you own. There may be special provisions or documentation requested by the insurer in the instance of rare collectibles and especially valuable items.
- Personal Liability Insurance: This insurance is to protect you from costs that might arise from a 3rd party injuring themselves on your property, whether through your fault or not. For example, if someone were to slip, fall, and injure themselves on your property, this liability coverage could cover their medical bills and address costs of any litigation brought against you.
- Landlord Insurance: While most of the types of insurance we will discuss here are for people’s primary residences, it is worth noting that there are special insurance policies available in Hong Kong for those that rent a property to others. They will have unique needs as a result of not residing in the property, so Landlord Insurance would be a great thing to have.
- Tenant Insurance: On the flip side of the rental coin, those that rent a property will not typically have to worry about insuring the building. Therefore, they should obtain a specialized Tenant Insurance plan that addresses the unique needs of those that rent their home.
- Theft coverage: While Hong Kong is a safe place to live, break ins are not entirely unheard of. To protect your valuables and make sure they can be replaced if stolen, you will want to ensure that theft coverage is included in your Home Insurance policy.
- Property repair coverage: This type of insurance coverage mainly focuses on covering the costs for repairing appliances in your home should they break down.
- Fire Insurance: Fire insurance is frequently included in Home Insurance policies, as it will help to rebuild your home and either replace or reimburse you for your belongings should all or a portion of your property be damaged or destroyed by fire.
- Disaster Insurance: There are a number of other disasters that could take place and destroy your property. These include typhoons, earthquakes, floods, burst pipes, explosions and landslides. It is a good idea to have all of these included, but some specific disasters, like typhoons, apply to Hong Kong more than earthquakes. The specific environment surrounding your home could also make a difference in what disasters put your property at the greatest risk. For example, a home at the bottom of a mountain should certainly have coverage for floods and landslides.
More than the overarching types of plans themselves, there are a number of smaller features of them that you should be aware of:
- Some home insurance plans include 24-hour home assistance that can be used to obtain recommendations for professionals like electricians, plumbers, contractors, handymen, nurses, babysitters, exterminators, cleaners, and more.
- Your Home Insurance should work on a ‘new for old’ basis. This means that, should your property need to be replaced by your insurance, you will receive a new version of the item, rather than a used one of similar age, wear, etc.
- There are benefits available that apply to damage that occurs during a move.
- Some Home Insurance plans include coverage for rental costs as a result of damage to the home make it uninhabitable.
- Home Insurance plans sometimes include lump sum payouts for deaths that occur in the home.
- Some Home Insurance plans include payouts for loss of income due to hospitalization as a result of an accident that occurred at home.
- Other coverages that are commonly included in Home Insurance plans, often at no additional cost, are personal accident cover, debris removal, surveyor and architect costs, lock replacement following a break-in, personal computer cover, frozen food cover, and cover for the personal items of domestic helpers.
- Home Insurance can even extend outside the home in some cases. There are benefits for damage, theft or loss of personal property at your place of work. It may even protect your belongings, money and/or credit card transactions as you travel overseas for business.
Other things you should know
- Sometimes the management companies of apartment buildings in Hong Kong will offer policies to all of their residents. In this scenario, your insurance premiums will often be included with your management fee.
- Per the terms of many Home Insurance policies, the insured and their family must take reasonable steps to prevent damage to or loss of their property, maintain their property, and uphold any regulations or statutes as they relate to their property. Failure to do so can result in voiding the policy, or the denial of claims.
- Remember, like other types of insurance, Home Insurance may require a payment to be made every time you make a claim. This can be a set excess or a percentage of the value claimed.
- Sometimes Home Insurance policies will only cover an individual’s primary residence.
- Premiums for a Home Insurance policy will be determined based upon the projected value of your home and its contents.
- Another interesting point about Home Insurance in Hong Kong is that buildings that are lower to the ground, such as village houses, are often put through greater scrutiny by insurers. This could lead to higher premiums for coverage of such buildings, and some policies will outright exclude coverage for these types of homes.
- Finally, there are many common exclusions that can result in a claim on your Home Insurance being denied. These include, but are not limited to:
- General wear and tear, including that caused by rust or corrosion, rot, moisture, mold, mildew, or market depreciation
- Theft of convenience as a result of homeowner negligence
- Government imposed fines
- Accidents or injuries caused by an act of willful maliciousness, violence, recklessness or vandalism by the homeowner
- Property loss from homeowner negligence
- Mechanical failure of household appliances or electronics
Of course, sometimes one or more of the above exclusions will be covered by a given policy. Be sure to check policy documentation and confirm with your insurer so that exclusions are well defined.
So now that you have the lowdown on Home Insurance in Hong Kong, it may be time to get a plan of your own. Contact the knowledgeable insurance experts at Pacific Prime Hong Kong today! They will be able to provide you with a range of options from different insurers, as well as give you a free quote.