[Homeowners must read] How to order home insurance coverage?

Assessing the amount of insurance you need for your structure and personal effects can be a real headache. The situation is the same whether you are a local resident or a foreigner planning to purchase property. But no matter who you are, it is necessary to purchase appropriate home insurance in Hong Kong.

First, there are a few things you must consider and understand before asking around for quotes. As an expert in property and casualty insurance, Pacific Prime will now introduce to you the information that home owners should know, including what home insurance is and the factors that determine the price of home insurance in Hong Kong.

What is home insurance?

Simply put, home insurance is designed to protect you against losses caused by unforeseen disasters

Provides coverage for property damage caused by fire, lightning, hail, windstorms, and even explosions (in some cases). Any property or home that is susceptible to floods and earthquakes should be covered by insurance against these natural disasters.

For reference, please refer to the following example: According to the records of the Hong Kong Observatory, a sudden earthquake occurred in Hong Kong on March 14, 2022, about 92 kilometers northeast of Hong Kong, near the southeast coast of China. The Bloomberg report noted that the earthquake was estimated at Magnitude 4 based on the revised Mercalli intensity scale - enough to rattle doors and windows and cause hanging objects to swing. Although not reported, an earthquake of this magnitude would have caused some structural damage, especially to the foundations of affected homes and buildings.

Whether an earthquake is involved or not, the easiest mistake to make when buying home insurance is not buying enough. To know how much home insurance you need, first look at the different types of costs.

3 factors to help you decide how much home insurance coverage you need

Now that you have a basic understanding of home insurance, it's time to take a closer look at the various expense categories. Doing this will help you decide how much insurance you need. The following three factors are not exhaustive, but they should give you a rough idea of how much you should spend on insurance.

The cost of rebuilding a house

The key word here is "rebuild", so you first need to measure the dimensions of your house/property and then multiply it by the local construction costs, such as building materials, labor costs, etc.

Once you have calculated the cost of rebuilding your home, it is recommended that you hire a professional for another estimate. That way, you can be more certain of the amount of coverage you’ll need to cover the estimated rebuilding costs.

Replacement costs of personal items

Over time, we accumulate items of varying values in our homes, but we rarely consider what would happen to those items in the event of a fire or flood. That’s why you should consider getting your belongings appraised so you know their value.

To estimate the value of your items, you should first create an inventory or list of your items. It is recommended that you go to each room first, count the items you own, and make a record. You can take photos and check the market price of your items. These steps may seem tedious at first, but the more detailed your records are, the more accurate your estimate of the amount of home insurance you will need.

Once you know the total value of your personal belongings, you can add that to your estimate of the cost of rebuilding your home.

Expenses for assuming property liability

Standard home insurance plans generally provide you with liability coverage if someone is injured on your property. Unfortunately, anything can happen in life: tripping over a rug and breaking a hip, sliding down the stairs and breaking an ankle, or even getting bit by your pet dog.

Liability insurance will protect you from expensive medical bills or lawsuits, and we also recommend that you consider purchasing umbrella home insurance, which can provide additional protection beyond your current policy. The cost of rebuilding your home and replacing your belongings may not be difficult to estimate, but the cost of liability is another matter. Therefore, the smartest thing to do is always to contact a reputable home insurance broker.