While Hong Kong has earned the title of the world’s freest economy for twenty consecutive years, its citizens are struggling to buy property in one of the world’s most unaffordable cities. That’s particularly the case for young families and newlyweds.
Most of them have to tighten their belts drastically if they wish to own a home of their own. While every penny counts, that doesn’t mean one has to cut down on all expenses. When it comes to home purchases, insurance is something that should not be missed.
Home Contents Insurance
Home insurance is basically divided into two main categories: home contents and buildings. Home contents plans protect your household items against risk of loss or damage. In general, covered items include furniture, electrical appliances and valuable property. The maximum limit of liability depends on your premium, so it’s important to get familiar with the conditions and exceptions before insuring your home.
In the highly competitive insurance industry, it’s not hard to imagine almost anything can be covered: works of art, furs, photographic equipment, your pet’s medical expenses, you name it. But keep in mind that wear and tear is uninsurable. For example, seepage of water due to window frame corrosion is non-claimable. Compensation for damaged electrical appliances due to humid weather is subject to your plan’s coverage policy.
Most home insurance plans provide third-party liability coverage for owners. It protects you against legal liabilities of third parties for bodily injury or property damage, such as falling aluminium windows. The maximum limit of liability can be as high as $10 million. Yet, owners still have to appoint qualified contractors to check and maintain aluminium windows regularly. Your insurance company may reject your claim if the accident is deemed a result of your own negligence.
Building insurance covers mainly damage to the building structure. For new residential developments, it covers floorboards, tiles, walls and ceilings, but any interior alternation or repair made by the owner thereafter will not be covered. As for second-hand flats, electrical appliances left behind by previous owners are considered structural parts. But insuring village houses or tong lau can be tricky. Insurance companies or banks may reject your application if your home dates back a considerable amount of time, say, 30 years. Even though they are willing to insure it, huge premiums may be involved. Owners should also be aware the risk of unauthorised structures. They are not insurable and should be demolished as soon as possible.
You may argue that you are on a tight budget, but this is all the more reason you should insure your home. You really can’t risk losing it.