Home Insurance: Things You Need to Know Before Buying

Home insurance is something you need if you are a homeowner. In Hong Kong, owning a home is difficult due to limited land and high property prices. Therefore, whether you own a private property, a village house, or public housing, or if you rent out your flat or not, it is important to have home insurance. This will protect against unexpected loss of home contents and personal liability.

MoneySmart has compiled the details and considerations to be aware of before purchasing home insurance, helping you choose the most suitable coverage for your home. So, stick around for more details.

Table of contents: Things to know before buying home insurance

• What’s the difference between fire insurance and home insurance?
• What is fire insurance?
• What is home insurance?
• Home insurance vs. fire insurance: Premium calculation method
• Home insurance: Different definitions of property and additional coverage for jewellery
• Home insurance: Coverage for domestic helper’s property and liability
• Home insurance: Deductible payment required for claims
• Home insurance: Keep receipts of household content for the claims process
• Home insurance: Excludes natural wear and tear from coverage
• Home insurance product recommendations
• Frequently asked questions: Home insurance
• Related articles

What’s the difference between fire insurance and home insurance?

Many people confuse fire insurance with home insurance, thinking that by purchasing fire insurance, they are already covered by home insurance. However, the coverage provided by these 2 types of insurance is quite different.

Comparison	Home Insurance	Fire Insurance
Coverage	Valuable belongings, furniture, household appliances, home renovations	Walls, floors, ceilings, doors, windows, and existing decorations
Premium	Determined by building age, property type, location, and loan amount	Calculated based on unit floor area and building type
Necessity	Owners or tenants can decide whether to purchase according to their needs	Mandatory to purchase when providing the building; optional afterwards

What is fire insurance?

Fire insurance is a shorthand for “building structure insurance,” which covers the walls, floors, ceilings, doors, windows, and existing decorations of the building that the property owner has purchased.

And it covers losses caused by accidents such as water damage, fire, typhoons, or other natural disasters, compensating for the cost of replacement or even rebuilding due to damage to the building structure.

Generally, when homeowners apply for a mortgage from a bank, they are required to purchase fire insurance to protect the bank’s risk. Some large-scale housing estate management companies have already purchased fire insurance for the estate, so the bank may not require homeowners to purchase additional insurance.

What is home insurance?

Once an accident occurs, it is not only the building structure that is affected, but home insurance, as the name suggests, covers household contents such as furniture, household appliances, home renovations, and valuable items such as money and collectibles.

Insurance companies have varying definitions of household contents. Some home insurance policies also cover legal liability for injuries or damages caused by the policyholder and their family members, such as lawsuits or compensation resulting from accidents with neighbours or the public.

Therefore, it is important for everyone to inquire with the designated insurance company before purchasing home insurance.

Home insurance vs. fire insurance: Premium calculation method

In addition to the difference in coverage, the premium calculation methods also vary.

Premiums vary based on floor area, building age, and property type

The size of a property affects the premium for home insurance. Other factors like building age and property type can also impact insurance companies’ risk assessment and result in adjusted premiums.

Fire insurance calculation method

Fire insurance is mainly divided into basic coverage and additional coverage.

Basic coverage

Basic fire insurance mostly covers accidental fires, explosions from petroleum gas, and other similar incidents, with generally lower compensation amounts and limited coverage for insured items.

Additional coverage

Additional coverage for incidents beyond fires, such as explosions, water damage, burst pipes, and more, can be added to fire insurance, but the premium will be higher.

Home insurance purchase note: The larger the space, the higher the premium will be.

Home insurance premiums are mostly calculated based on the unit floor area and building type, with larger areas resulting in higher premiums (you can refer to the 500 sq. ft. floor area and 600 sq. ft. floor area home insurance premium comparisons).

Policyholders can choose different levels of home insurance coverage based on their needs and the value of their possessions. However, it is important to note that insurance companies often set a maximum compensation limit for each item. For valuable items like jewellery, it is recommended to purchase additional insurance based on their value to ensure adequate coverage.

When purchasing home insurance, it is also important to consider the deductible amount, which is determined based on the cause and extent of the loss as well as the building age.

Home insurance: Different definitions of property and additional coverage for jewellery

Different insurance companies have varying definitions of “household contents,” which can be classified into personal, valuable, and other items like home decorations, personal documents, and money.

Don’t forget to carefully read the terms and conditions to understand the definitions and exclusions. They can choose coverage levels based on their needs and possessions’ value.

Insurance companies often set maximum compensation limits for items like furniture, appliances, and fragile items.

If additional coverage is needed, it’s advisable to purchase separate insurance for valuable items. For example, the Chubb “My Home” plan allows adding extra coverage, with a maximum of HK$50,000 per item. The Zurich “HomeChoice Insurance Plan” also provides additional coverage for privately owned art pieces.

Home insurance: Coverage for domestic helper’s property and liability

Many households hire domestic helpers for chores. Some home insurance plans cover not only the policyholder and their family but also the personal property of the helper in case of accidents or theft.

For instance, Ping An Anti-epidemic Home Package (5-storeys or more) offers coverage of HK$10,000 for loss or damage to the helper’s property due to accidents. If the helper causes damage or injury to a third party during work, resulting in legal liability for the policyholder, home insurance can provide compensation without extra cost.

Home insurance: Deductible payment required for claims

Deductibles are the amount policyholders must pay before making a claim, also known as a “deductible fee.” The fee is determined by the cause of the loss and the age of the building.

According to a report, deductible fees for water damage range from HK$250 to HK$3,000 for plans covering household contents with a building age under 25 years.

For landslides or subsidence, fees range from HK$2,000 to HK$10,000. Liability coverage fees for premises under 25 years old range from HK$250 to HK$10,000 based on the cause of the loss. The difference between the highest and lowest deductibles can be up to 39 times greater.

Consumers should compare coverage, premiums, and deductible details with insurance companies. Higher deductibles result in lower premiums, while lower fees lead to higher premiums. Claims can only be made when the compensation exceeds the deductible.

Home insurance: Keep receipts of household content for the claims process

In the event of a serious incident such as a fire or a simple dispute, such as a complaint from a neighbour regarding water leakage and a demand for compensation, the policyholder should immediately notify the insurance company, take photos of the scene, and arrange for the insurance company to inspect the situation on-site.

It is recommended not to make private settlements with third parties, as the insurance company has the right to refuse such claims.

Home insurance: Excludes natural wear and tear from coverage

To avoid future complications when making claims, pay attention to the exclusions when purchasing home insurance. These exclusions often include scratches or natural wear and tear of items, mechanical or electrical breakdowns, and situations where the unit is unoccupied for more than 30 consecutive days. Different insurance plans have different terms and conditions, so it is important to read the policy documents carefully and understand the coverage.

Home insurance product recommendations

Frequently asked questions: Home insurance

What is the difference between fire insurance and home insurance?

Fire insurance covers the building structure, such as walls and floors, while home insurance covers household contents like furniture and appliances.

How are home insurance premiums calculated?

Home insurance premiums are determined by factors like the property’s floor area, building age, and property type.

What additional coverage can be included in home insurance?

Home insurance can provide coverage for moving losses, medical expenses, damage to other people’s property while travelling, and liability for accidents or incidents involving the insured premises.

What is the deductible on home insurance?

A deductible is the amount that policyholders must pay before making a claim. The fee is determined by the cause of the loss and the age of the building.

What should policyholders do to facilitate the claims process?

Policyholders should notify the insurance company immediately, provide photos of the incident, and keep receipts or take photos of household contents as evidence for easy claims.

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