Home, offices, and other commercial buildings are valuable assets that should be protected - especially in Hong Kong. Buying the right home and building insurance policy ensures that you will receive the compensation you need to rebuild your building in the event of a loss.
There are many types of building insurance in HK meant to insure different types of buildings. More often than not, building insurance is included as part of a larger property insurance policy with coverage for the building itself and the contents within.
Dwelling buildings are insured under home insurance policies whereas commercial buildings like office towers, retail spaces, and industrial/warehouse properties are insured under commercial property insurance policies. These different policies have coverage and terms and conditions that are uniquely tailored to the needs of these specific occupancies.
That said, regardless of which type of property you’re purchasing building insurance for, we want to highlight 3 key things you should watch out for when picking between different options.
Do you have adequate building insurance limits?
On a densely populated island with very little land to go around, homes and property in general are very expensive in Hong Kong. According to recent data from 2017, the average cost per square foot for a home is a staggering HK$16,200 on Hong Kong Island.
A common problem with many clients who have had their policies with the same insurer or brokerage for a long time is that their building and property values have never been updated. A good broker would review your insured limits each year and revise as necessary.
Many factors like inflation or a sharp rise in construction costs could mean that you’re now underinsured and won’t have enough funds to rebuild your building should you suffer a total loss.
On top of that, most home and building insurance policies will also cover the contents inside so make sure you go room by room and tally up your contents from furniture to clothing to electronics and update those too with every renewal.
Look out for exclusions and/or extra coverages?
Not all home and building insurance policies are alike. While many may look the same, an insurance policy is a legal document where even the smallest thing can change your coverages dramatically. An experienced insurance broker will be able to help you note some key differences that may be the deciding factor between several quotes.
Some things to look out for include:
- Limits of Insurance: One policy might have a more attractive price because they are giving you less coverage. Check this to ensure you’re making an apples to apples comparison.
- Method of Valuation: Two of the most common methods of valuing property in the event of a loss is Actual Cash Value (ACV) or Replacement Cost (RC). ACV is usually the cheaper option because regardless of what limit you purchased, depreciation will be calculated on your property at the time of loss meaning you’ll get less compensation.
- Perils Insured and Coverages Provided: There are different tiers of building insurance and the cheapest option may not be the best one - in fact, it rarely is. Make sure your insurance policy has coverage for things like mysterious disappearance and coverage for electronics damaged by a power surge, by-law coverage, etc. A Trusted Union insurance broker will help you point out key coverages that are important for your specific situation to help you make a decision between several proposals.
- Deductible Clause: Many brokers and clients choose to adjust the deductible in order to reduce the total premium charged. Although this isn’t inherently bad, make sure you’re aware of this when comparing policies.
There are a lot to watch out for on your policy and a good insurance broker points these out to you and explains the pros and cons of each.
Consider bundling policies together
With sky high property prices in Hong Kong, one of the most common questions we get asked is: “how much is building insurance in Hong Kong.” There are many factors that affect your building insurance premium but no matter what the answer is, it’s almost always too much. Luckily, there are ways you can save on your building insurance premium without sacrificing coverage.
If you’re purchasing building insurance for a commercial property, you may also require liability insurance, cyber insurance, etc. You may be able to find savings if you can bundle your insurance policies together with one insurance company.
The same concept may apply for home insurance buyers as well who have other insurance needs (ie. multiple vehicle or business insurance).
A good building insurance broker will help guide you towards the right insurance decision for your needs and budget. Contact a licensed Trusted Union insurance broker for a no-strings-attached policy evaluation.