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Neon sign damaged by typhoon

Neon signs of all shapes and sizes are a common sight in the prosperous city of Hong Kong. If any of these neon signs are damaged by a typhoon, would a shop/business insurance policy offer sufficient cover? 

When a typhoon blew through Hong Kong in July last year, the neon sign hung outside Mr. Lui’s shop was destroyed by the strong winds. As Mr. Lui had taken out shop insurance, he filed a claim for the loss with his insurance company, but it was rejected. 

Why did Mr. Lui’s insurer reject his claim? 

The insurer rejected Mr. Lui’s claim on the grounds that his shop insurance only covers the property inside the shop which belongs to him or for which he is responsible, including all shop contents, fixtures and fittings, deeds, documents and stock etc. As the damaged neon sign was hung outside Mr. Lui’s shop (the insured premises), it did not fall within the insurance coverage and therefore the insurer rejected his compensation. 

Many shop owners may have misunderstood that all the property related to their business is covered by their shop/business insurance and also assume that “external property” like neon signs and all types of signage are also part of the contents and are therefore covered by the same policy. However, shop contents in shop insurance only refers to those properties normally kept inside the shop premises. If the shop owners would like their shop insurance to also cover the neon signs outside their shops, our advice is they should discuss with their intermediaries to extend their cover to include “external property” with an additional premium. 

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