Accidents occur when incidents happen unexpectedly. That’s the moment you would need home insurance to cover an unexpected event.
A home insurance plan provides coverage for property, household belongings, personal items, and third-party liability compensation whenever accidents happen. Whether it’s causing harm to others or damaging their property, it can cause significant stress and financial loss for homeowners and tenants.
Therefore, home insurance is essential for households. To maximise its benefits, it is important to understand the extent of coverage and the amount of compensation offered.
Table of contents: Home insurance
- What does home insurance cover?
- How is the home insurance premium calculated?
- Considerations for different insured housing parties
- Home insurance: Common exclusions
- Related articles
What does home insurance cover?
When buying home insurance, many people are primarily concerned about “personal belongings coverage.” This coverage compensates for the loss, damage, or destruction of personal belongings inside the home during the “insurance period” due to accidents.
Home insurance typically includes 3 main components: home contents coverage, third-party liability insurance (also known as public liability insurance), and coverage for temporary accommodation expenses.
There are also optional coverage options available for selection. It’s recommended to compare the products to find the best fit before purchasing.
Home insurance: Home contents coverage
Home insurance provides coverage for accidents that may occur, such as typhoons, lightning, fires, theft, and burst pipes. It also offers compensation for temporary accommodation expenses if your residence becomes uninhabitable due to these accidents. The coverage includes clothing, footwear, furniture, appliances, decorations, food, and more.
Some home insurance policies may also cover the loss of personal and family documents as well as personal belongings, with specific limits for each item or set of belongings.
The basic plan of home insurance typically does not include coverage for damages to the building structure, such as doors, windows, floors, or walls, caused by wind and rain. If you need this coverage, you can add the “building structure” coverage to your policy.
Home insurance: Third-party liability insurance
When purchasing home insurance, it usually includes “public liability insurance, third-party liability insurance, or personal liability insurance,” which covers the policyholder and their family members’ legal liability for accidental injuries or property damage caused to others due to accidents or negligence.
For example, if a strong wind blows off a glass and injures a passerby, if a burst water pipe in your home causes water seepage to the unit downstairs, or if a fire affects neighbouring units, resulting in property damage or loss of life, all of these situations are covered.
As a homeowner, it is important to consider the insured amount of the management company, which should have a minimum coverage of HK$10 million. Additionally, check if the coverage includes liability for small homeowners. Certain home insurance policies offer global third-party liability coverage, meaning accidents outside the home in Hong Kong or other locations are still covered.
Seek professional assistance for the claims process
If you cause injury or damage to others, file a claim with your insurance company. Don’t admit fault or promise compensation privately. Report the incident to the police and notify your insurance company right away. Follow the instructions from your insurance company, or let their representatives help you.
Home insurance: Temporary accommodation expense coverage
This coverage applies when accidents make the residence temporarily uninhabitable and temporary accommodation expenses are needed. Some home insurance policies also cover temporary accommodation expenses and meal allowances if a Typhoon Signal No. 8 or above, or a Black Rainstorm Warning, causes water supply or electricity interruption or elevator service suspension for a specified period.
Home insurance: Building structure coverage
Building structure insurance, also known as “fire insurance” or “shell” coverage, protects residential buildings from losses caused by accidents like fires, explosions, burst pipes, lightning, storms, floods, and more. It covers the original floors, walls, ceilings, tiles, doors, and windows, but not furniture and miscellaneous items inside the property. The coverage amount is usually determined based on the rebuilding cost or outstanding mortgage.
Home insurance: Domestic helper insurance
If you have a domestic helper or housekeeping assistant and your home insurance offers optional insurance for them (including mandatory employee compensation insurance), you should consider buying it. This insurance covers medical expenses, belongings, repatriation costs, and liability to third parties, among other things.
How is the home insurance premium calculated?
Built-up area size affects premium
Currently, home insurance is mostly calculated based on the size of the home’s built-up area. However, the higher the coverage amount, the higher the premium will be. Therefore, it is recommended to compare the pros and cons of different home insurance policies online. The detailed coverage and annual premiums provided by different insurance companies can vary significantly.
For a home area of 500 square feet or smaller, the annual premium ranges from around HK$500 to HK$1,200. The maximum compensation amount for home contents can range from HK$300,000 to HK$1,200,000.
The age of the building affects the premium
In addition to the size of the property, the age of the building also impacts the insurance premium. The government mandates that buildings and housing estates that are at least 30 years old undergo significant renovations.
Residential properties under 30 years old generally have lower premiums. However, properties that are 30 years or older, such as tong lau or standalone buildings, may require individual unit assessments by certain insurance companies. In recent years, as the average age of some traditional blue-chip housing estates has reached or exceeded 40 years, many home insurance policies have been introduced without an upper limit on building age as a selling point.
Building types impact the premium
Other than the age and built-up area, the type of building also impacts its insurability. Certain home insurance policies have specific requirements for “tong lau,” “public housing,” “HOS flats,” “detached houses,” or “village houses.” This may involve separate inquiries to insurance companies to determine coverage limits and premiums. In the case of general buildings, if the insured property contains unauthorised structures or illegal construction, the insurance company will not provide coverage.
Considerations for different insured housing parties
From the point of view of landlords and tenants who rent properties, both have their own duties. So, they can each buy home contents insurance to safeguard against unexpected losses.
Landlords are advised to buy fire insurance and home contents insurance
When it comes to the landlord’s responsibility, it is generally advised to obtain home contents insurance and “building structure” insurance, also known as “building insurance.” This provides coverage for both the building structure and the furniture and other items inside the property in the event of accidents such as fires, water damage, explosions, and theft.
Home contents insurance also includes third-party liability coverage, which protects the landlord from legal liability for accidents involving third parties within the building or its public areas, as specified in the Deed of Mutual Covenant.
Tenants purchase home contents insurance to protect their belongings
Home accidents can happen when we least expect them, like during a summer typhoon or in the middle of the night when water pipes burst. These unexpected events can lead to windows being blown open by strong winds or belongings being damaged by water, causing a lot of repair headaches.
Luckily, if you have home contents insurance, many insurance companies offer “emergency assistance services” to their policyholders. These services include connecting you with trustworthy technicians for electrical repairs and plumbing services, so you don’t have to stress about finding reliable professionals to handle the repairs.
Home insurance: Common exclusions
In home insurance, the most common things that are not covered are damages to items because they are old or worn out, not because of accidents. For example, scratches, corrosion, walls, ceilings, and floors getting old, window frames or glass adhesive getting old or deteriorating, or water seeping in because things are old or not in good condition are not covered, and you won’t get money for them. However, if a window breaks because of strong winds and rainwater comes in and damages your furniture, appliances, and other things, then you will get compensation for that.
Self-payment is required for partial expenses
Compensation typically includes a deductible. The deductible for losses caused by fires, lightning, and explosions is usually lower, while the deductible for water damage is higher.
Another common exclusion in home insurance is that properties left vacant for more than 30 days are not eligible for claims. Please note that personal belongings like mobile phones and laptops are usually not covered.
Proof of the items is required for claims, so it is important to keep purchase receipts and take photos of the items for claim purposes, which can also reduce disputes during the claims process.
Finally, it is common for people to purchase both home contents insurance and building insurance together. When renewing your policy, make sure to check the rebuilding value of your unit to ensure that you have adequate coverage.
Frequently asked questions: Home insurance
What does home insurance cover?
Home insurance typically includes coverage for home contents, third-party liability insurance, and temporary accommodation expenses. It protects against accidents such as typhoons, fires, theft, and burst pipes, and provides compensation for damaged personal belongings.
How is the home insurance premium calculated?
The home insurance premium is usually based on factors such as the size of the property, the age of the building, and the type of building. The coverage amount and annual premiums can vary among insurance companies.
What is third-party liability insurance in home insurance?
Third-party liability insurance, also known as public liability insurance, covers the policyholder and their family members’ legal liability for accidental injuries or property damage caused to others. It provides protection in situations such as injuries caused by falling objects or property damage due to burst water pipes.
What is the importance of understanding the extent of coverage in home insurance?
Understanding the extent of coverage in home insurance is crucial to ensure that you have adequate protection. It helps you know what is covered, such as personal belongings, temporary accommodation expenses, or building structure damages, and what may be excluded from coverage, such as damages due to wear and tear.
What are the considerations for different insured housing parties in home insurance?
Landlords are advised to buy building structure insurance and home contents insurance to protect both the building and the items inside. Tenants, on the other hand, can purchase home contents insurance to safeguard their belongings against unexpected losses caused by accidents like fires or water damage.
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