Looking at home insurance and typhoon damage

What started out as yet another mid-August typhoon, Typhoon Hato quickly intensified in strength as it barreled down on Hong Kong, unleashing hurricane force winds and rain, prompting the city to raise its first T10 warning in 5 years. As the typhoon raged, videos and reports of damage to homes and property were quick to come in with the SCMP reporting that there could be upwards of HKD 8 billion in losses. This typhoon and the damage it caused has certainly led to many people in the city wondering whether home insurance will cover damage from storms like this. Here, we aim to take a look at what you need to know about home insurance and how it covers damage from typhoons and other major storms.

Does home insurance in Hong Kong cover typhoon damage?

As a general rule of thumb, home insurance policies in Hong Kong will cover your domicile should damage be done during a storm.

The thing to be aware of here, however, is that when people talk about home insurance in the city, there are actually many different types of cover that can be combined to form what many of us think of as "home insurance". Generally speaking, there are two major types of insurance that most people will secure:

• Property insurance - Designed to cover the physical parts of a building/home e.g., walls, roof, floors, etc. in the event of damage. Most banks will require this type of insurance to be secured if you have a mortgage.
• Homeowners insurance - Designed to cover the contents of a home e.g., jewelry, electronics, personal items, etc.

The good news here is that almost all of the plans available will cover typhoon damage. Of course, like any other type of insurance, there will be differences between plans so it is incredibly important to be aware of what your plan covers.  

How do I know if my policy covers damage?

There are a couple of ways you can find out how or if your insurance covers your property - either the home itself or its contents - in the event that a typhoon should cause damage.

The first way is to review the documentation that comes with your plan. These documents are often either emailed to you, sent to you in the mail, or provided by the insurer/broker when you sign up for coverage. Often referred to as, "policy documents", these files provide in-depth information on what exactly is covered by your plan and the exclusions the insurer has put on the policy.

Almost all policy documents in Hong Kong will explicitly state whether damage caused by typhoons is covered or not. The best place to look for this information is in the exclusions section of the documents.

The second way to find out whether your policy covers damage is to talk with either the insurer or broker directly. For example, if you have used Kwiksure as your broker you can contact your advisor and they will be able to help you decipher whether you are covered or not.

One thing that is important to point out here: It would be a good idea for you to know for sure whether your home or contents are covered for typhoon damage or not before a typhoon hits. If there is damage and you find out that you natural disasters are not covered, there are unfortunately no plans available that will cover you after the fact.  

If you are looking for a new home insurance policy, then it would be a good idea to ask your broker or advisor about typhoon coverage - most insurers will cover this via fire insurance policies - and be sure to clarify any misunderstandings before you purchase the plan. This can ensure that you will know exactly what is and is not covered, and if necessary identify whether you will need additional coverage or not.

5 things to be aware of when it comes to home insurance policies and typhoons

1. Be aware of your coverage limits

While most home insurance plans sold in Hong Kong will cover damage caused by typhoons, this does not necessarily mean that all of the damage caused will be covered. All coverage plans sold in the city come with set claims limits.

For example, if your property insurance plan covers up to HKD 1,000,000 in total damage and your home has say HKD 1,500,000 in damage done, the insurer will cover up to their limit and leave you to pay for the rest.

The same can be said for plans that cover your home's contents. There are usually fairly explicit limits set in regards to loss from natural disasters. This is where not only reading but also understanding your plan's documentation can prove to be incredibly useful. Pay close attention to the wording of the plan, as some will include a separate limit associated with natural disasters and coverage amounts.

2. Certain losses caused by typhoons might not be covered

A large number of home insurance policies, especially those that cover property, will not automatically cover damage in the event of a flood. If, for example, you have a home in a flood-prone area and a typhoon causes flooding you might not be covered. In many cases, the insurer will consider these claims on a case-by-case basis.  

Another example here is that some policies will exclude damage caused by landslip. Typhoons can bring a lot of rain and in some areas of the city, this can lead to a greater risk of landslip. The problem here is that if a typhoon causes a landslip and your policy excludes it you might find your claims denied.

3. Contents stored in certain parts of your home might not be covered

When it comes to homeowners insurance many policies will actually exclude losses of contents that are stored outdoors. For example, if you store a BBQ or washing machine on your deck, porch, rooftop patio, etc. and it is blown away during a typhoon your plan will likely not cover its loss.  

It is also worth noting here that some property insurance policies will not cover outdoor fixtures. As with everything else here, it would be beneficial to review your policy documents to ensure you know what is excluded.

4. If damage was caused by negligence, it likely won't be covered

Almost all policies that cover your home have an exclusion attached to them that states that if damage is caused by, or can be attributed to negligence then any claims will not be covered. For example, if you leave your windows open during a T10 storm and there is serious water damage then there will be a good chance it won't be covered.

5. Know your home insurance options

As mentioned above there are a number of different policies that can be combined to make up home insurance. If you are looking for a plan, talk with the advisors at Kwiksure. We can work with you to identify the policies available that will meet your coverage needs.