Reduce Your Risk: Benefits of Insuring Property in Hong Kong
If you own any real estate in Hong Kong, you need to think about getting a property insurance to protect your asset. In Hong Kong, you would think that this insurance is not really needed. After all, developers adhere to the strict fire and building regulations of the government. However, a lot of real estate owners in Hong Kong have taken out this type of insurance. In fact, an article from BusinessWire.com revealed that in 2013, insurance policies for properties accounted for 37.6% of the gross written premiums – making it the leading category in the non-life insurance segment.
A real estate property is the biggest investment that you will even make in your lifetime. In Hong Kong, the value of this investment is more pronounced because this is one of the most expensive real estate markets in the world. Naturally, you want to protect that money that you invested in it. The best way to protect anything of value is to insure it.
Why do you need a property insurance?
There are many reasons why you need to get a property insurance. Mostly, it is for your own peace of mind. You also need it to protect your financial standing. You do not want to be burdened with a huge financial obligation in the event that something bad happens to your real estate property. If your home is damaged after a natural calamity, a property insurance will help you get the finances to fix it. In case your belongings are damaged or stolen, the same can be claimed from your insurance company.
Probably the best scenario that will make this type of insurance valuable is fire. We all know that fire can destroy both the structure and possessions inside the property. You do not have to feel the full devastation of this unfortunate event if you took the time to insure your real estate property. Through the insurance claims, you can start rebuilding your property without digging too deep into your pocket.
When it comes to the coverage of a property insurance, you have three options:
Coverage for the structure of the property, including permanent fixtures and fittings.
This type of policy will only cover the damages to the external or internal structure of the property. This will include the permanent fixtures and fittings inside the home. For instance, if the pipe breaks, you can get a claim from your insurance company. However, it will not cover any of your belongings that were damaged by the water that burst inside the unit.
Coverage for the damage, loss or theft of household belongings.
This type of policy will cover the damages that your belongings will sustain – as long as it is within the perimeter of the property. Like the example, if your pipe breaks and the water destroys all the furniture and belongings in your kitchen, the insurance company can cover that. Of course, they will not cover the expenses that will be generated to fix the broken pipes. That is beyond the coverage of this type of property insurance. This insurance will also make you eligible for claims in case a fire destroys your possessions or in the event of a robbery. Once the company validates the incident, you can use the insurance claims to replace your stolen or damaged possessions.
Coverage for everything (structure and belongings).
Probably the safest type of insurance that you can get is a comprehensive one. That means you will get an insurance that covers the structural damages to the external and internal areas of the unit as well as the possession inside. Of course, this might be more costly compared to the other two but it should be worth it if it can save you from a huge headache after an unfortunate accident like a fire.
Take note that most property insurance policies in Hong Kong provide coverage for personal accidents inside the home – free of charge. But you have to discuss this with the insurance agency to make sure that you understand what type of claims you can get.
Like any other insurance policy, a property insurance is only as expensive as the coverage that you will choose. The more coverage, the more expensive the premium will be. You should at least expect to pay in the thousands for a coverage that is worth HK$1 million.
It will also depend on the insurance company that you will get the policy from. You need to choose the right coverage depending on your needs. If you are going to have the property rented, then a structural coverage should suffice. In case your tenant would like to request a coverage for their possessions, then you can negotiate for a higher rental price. If you are going to live in the property or will lease a fully furnished unit, a comprehensive coverage would be more practical.
Before you take out a property insurance, it is encouraged that you talk to the management company of the building where your unit is. They may have a block building policy. That usually covers the structural insurance of your unit. In most cases, this is already included in the management fee that you are paying them. Try to avoid getting a coverage that you are already paying for – to save you both time and money.
It is very important that you dwell into the details of the property insurance. Some cover damages from a fire. Although that is the most prominent danger, what about blocked drainages? In case a window from the upper units fell and damaged your own – how will you pay for it? These are important considerations when taking out this type of policy. In case you are insuring the possessions inside the home, make sure you define what items will be insured. Some insurance companies will base your claim on the depreciated value of the item – and not a new one. Be clear about what you prefer.
2 home insurance plans to check out
There are many options when it comes to insurance companies offering property insurance. According to the data from the Office of Commissioner of Insurance, there are 157 authorised insurers in Hong Kong. If you want to choose the right company, make sure they are registered with the Insurance Agents Registration Board (IARB).
To get you started, here are two of the leading insurance companies that you can look into:
Prudential General Insurance Hong Kong Limited
This insurance company offers the PRUchoice Home. This is an all-in-one insurance package that will protect not just the structure of your unit, but also the contents within. There are two types of plans. One is the Harmony Plan that allows you to get a maximum of HK$500,000 worth of claims in a year. The Premier Plan is more expensive, but that is because it will allow you to claim up to HK$1.5 million in a year. They offer a lot of extensions that will make your policy as comprehensive as possible. This includes benefits in case of a personal accident and even a coverage for any items that may be lost or damaged while you are travelling.
HSBC offers a HomeSurance that will protect both the structure and the contents of the unit. You can get as much as HK$10 million in personal liability protection. Your belongings can also be protected in case you take them out of the region (e.g. laptop, gadgets, etc). In case you have to replace a damaged or stolen possession, you can get a claim based on the value of a new item – not the depreciated one. This policy is offered with three options. In Plan A, you get to enjoy up to HK$400,000 claims for damaged, stolen, or lost household belongings. Plan B offers up to HK$800,000 while Plan C offers up to HK$1.2 million. When it comes to the premiums, the amount will depend on how big the property is. The monthly premium will cost between HK$87 to HK$269.
She is a Singapore Management University 2nd year undergraduate specialising in Strategic Management. From Tampa, Florida, she possesses an International Baccalaureate diploma from C. Leon King High School, and previously held the position of Treasurer of the King High School Division of the French National Honour Society and the Science National Honour Society. Abigail is currently acting as President of the French Cultural Club for SMU International Connections, and as a Resident Advisor and Fire Warden for the SMU Residences at Prinsep.
Abigail is a Former Florida Science Olympiad Champion in chemical forensics and protein modelling, and former Health Occupation Student’s Association District Champion in clinical nursing.
In her free time, Abigail enjoys interacting and caring for animals. She has previously volunteered for the Humane Society of Tampa Bay as an Adoption Assistant.