What you need to know about fire insurance in Hong Kong

According to the Hong Kong Fire Services, fire crews responded to 34,320 fire calls in 2015, or about 94 calls a day. These fires are most commonly attributed to accidents occurring during the preparation of food, careless handling of flammable items, and electrical faults. While building and fire codes are stringent in the city, there is still a chance that your apartment could be affected by a fire. Because so many of us stand to lose so much, it would be a good idea to mitigate losses by securing a strong fire insurance policy.

In this article we look define fire insurance policies, look at the different types of fire policies available in Hong Kong, and how fire insurance premiums are set.

Define: Fire insurance policy

As you can probably guess from the name, a fire insurance policy is a piece of insurance homeowners can take out to protect property from damages related to a fire. Most plans provide the following coverage elements:

• Damage caused by fire to belongings like computers, documents, electronics, paintings, clothes, jewelry, etc.
• Water damage and property damage that results from firefighters fighting a fire and even fire suppression systems e.g,. Sprinklers, or foam.
• Damage to the physical building and furniture.
• Living expenses should your home be made inhabitable.

The key thing to be aware of with fire insurance is that it is meant to be supplementary. What we mean by this is that basic fire insurance plans will usually only cover damage or loss from a fire and are designed to provide coverage in addition to property insurance.

For example, if you have a property insurance plan that covers your whole apartment and a fire insurance plan on top of that, any damages would first go against your property plan with any excesses covered by the fire insurance. If your property or home insurance does not cover say the loss of family documents or equipment due to fire, your fire insurance will cover this.

Types of fire policies available in Hong Kong

In Hong Kong insurers offer two major types of fire insurance:

• Basic coverage - Will cover the elements listed above, but only if they are damaged in a fire or from the effects of fighting a fire.
• Extra Perils coverage - Will cover the exact same things as basic coverage, but will also include coverage for extra perils such as tsunamis, earthquakes, landslides, damage from falling objects, windstorms, floods, etc.     

The major difference between the two is usually the coverage limits, which will almost always be lower for basic coverage, and what is covered. As you can see from above, extra perils coverage will cover more than just fire damage but will usually come at a higher premium.

How are premiums set?

The premiums you pay for fire insurance will normally be different for every person and are usually based on:

• How the property is used e.g., rental, owned, business.
• The type of property e.g., house, townhouse, apartment.
• The location of the property e.g., new building in a secure area, or old building in flood-prone location.
• Value of the assets at the time the plan is taken out. You will be asked to submit an itemized list with prices.
• Whether another insurance is in place e.g., you have home insurance.

For almost all premiums related to fire insurance, the provider will cover you and your property based on a set amount e.g., HKD 1,000,000. Each plan will generally cover 50-70% of the value of the goods insured meaning that you will receive 50-70% of the value of the items after depreciation.

When looking at plan premiums, it is important to read the plan documentation as some plans do exclude certain conditions. For example, it is common for insurers to not cover damage caused by deliberately set fires, or fires set by acts of war or terrorism.  

If you are looking for the best fire insurance coverage in Hong Kong, visit our website to learn more. Our insurance experts can help identify a plan that meets your needs and also recommend how you can ensure you get the best coverage and reimbursement should you need to submit a claim.