Most homeowners in Hong Kong would agree that their home is one of their most valuable assets. The majority of households in the SAR, however, do not have home insurance. In fact, nearly 80% of Hong Kongers do not have their home insured, according to a newly released Home Protection Awareness Study. So, why is there such a low uptake of home insurance here? And, more importantly, why do homeowners need to insure their homes? Read on to find out.
Home insurance misconceptions in Hong Kong prevail
Not only are most Hong Kongers’ homes uninsured, the Home Protection Awareness Study also discovered that 40% of residents have not considered the need of obtaining a home policy. Additionally, 36% say they do not have any valuable items at home, and 31% believe that the risk of loss and damage is minimal.
Lack of understanding about home insurance cover
While 60% of residents say they know the difference between home and fire insurance cover, most respondents (over 90%) are unable to pinpoint exactly what those differences are. Moreover, about 70% do not know that accidental damages caused by visitors and other non-homeowners (sometimes even pets!) can be covered by home insurance policies, thus revealing a general lack of understanding about home protection plans in the city.
Why is home insurance so important?
Considering that many Hong Kongers spend most of their lives saving money so that one day they are able to purchase their dream home, it might seem a bit ironic that a large proportion of people do not see the value in buying home insurance.
Home insurance ensures that, in the event that any losses or damages to your home occur, your household will have peace of mind from knowing that you’re going to get the financial support you need. While the chances of something going wrong is generally pretty slim, it does happen more than you might think.
For example, in the past 12 months, water seepage and burst pipes were the most common home damage accidents in Hong Kong. Throw in the fact that damaging typhoons do happen fairly regularly (e.g. Typhoon Hato), as well as the occasional occurrence of high-profile robberies, and it is clear to see why insuring your home against losses is so important.
Beyond being aware of the fact that losses and damages do occur, it’s also worth thinking about how detrimental the aftermath could be should an unfortunate event happen at home (e.g. a burglary). In fact, a Forbes article stated that unexpected expenses like loss of property due to theft or casualty (e.g. floods) for which the homeowner does not have home insurance is one of the top reasons why people go bankrupt. For this reason alone, home protection plans are a must-have policy for all homeowners.
Key types of home insurance cover
As with virtually all insurance plans, there’s no such thing as a one-version-fits-all home insurance policy. In fact, insurance options employed in protecting a dwelling will often combine several different coverages so that it’s tailored to the homeowner’s specific concerns. Here are a key few:
- Home contents: This protects valuable belongings like electric appliances and furniture. It’s an extremely important coverage benefit, especially when considering that the average estimated value of valuables in HK homes amounts to around HKD 400,000.
- Fire insurance: Frequently included in home insurance policies, fire insurance covers the building structure of your home (i.e. walls, ceiling, and floor), and will provide you an indemnity in the event of loss.
- Damages to the building: This covers the physical structure of your home, and also the permanent structures within (e.g. bathroom fixtures).
- Personal liability: This covers the policyholder in the event that a third party injures themselves on their property.
- Tenant’s liability: On the other side of the rental coin, tenant’s liability coverage is designed to protect tenants against damages caused to rented property for which they are legally liable.
Things to look out for
When purchasing home insurance in Hong Kong there are a few things you should be aware of. Reading through a policy’s fine print may seem like a boring and daunting task, but it can really save you from running into any nasty surprises in the future.
One key thing to watch out for is the coverage limit, which is the maximum amount your home insurance will pay you for a covered loss. This is very important, because if a loss or damage occurs, it doesn’t necessarily mean that all the costs will be covered - they will only be covered up to the maximum limit. So, for example, if your plan’s limit is HKD 9,500,000 in total damage, and your flat has say HKD 10,000,000 in damages done, the insurer will pay the HKD 9,500,000 but you’ll be on the hook for HKD 500,000.
Another thing to take note is the exclusions in your policy, which refers to the things that your insurance won’t cover. Common exclusions in home protection policies include:
- Deliberate acts by you or your household (e.g. intentionally damaging your furniture)
- Losses as a result of negligence (e.g. if you don’t lock your door and a break-in occurs)
- Mysterious/unexplained disappearance of items
- Mechanical failure of household items
- Wear and tear (e.g. mold)
Where can I go for home insurance in Hong Kong?
If you are searching for a high quality home protection solution, be sure to get in touch with our friendly team of experts at Kwiksure. With years of experience offering impartial advice and matching Hong Kong homeowners with the best plans on the market, we are standing by to provide you with a tailored plan that best suits your situation, and are more than happy to answer all your questions. Beyond home insurance, we also offer an extensive range of policies like car insurance, medical insurance, travel insurance, and maid insurance.
If you have any more questions, contact us today.