Home Insurance and Fire Insurance: The Duo for Comprehensive Protection

According to the latest study, the average mortgage term for Hong Kong people is 28 years. Property is the most significant investment for the average person, and it is also the asset that people invest the most money, time, and effort in. Accordingly, it is an imminent priority to invest in protection for one’s property.

When it comes to home-related insurance products, it is not unusual to have heard of terms such as "Home Insurance" and "Fire Insurance," but the same cannot be said for the actual coverage. For example, can one benefit from comprehensive protection with either one? In fact, the coverage of home insurance and fire insurance is very different. The former mainly covers the loss of property at home and the repair costs of objects due to accidents, while the latter covers the structure of the building. Both of them can complement each other to better protect one’s property with ease.

Home insurance on the market mainly covers unforeseen accidents, such as fire, typhoon, flood, landslide or theft, etc., for the insured’s home property and collection, including furniture, household appliances, stamps, coins, badges, precious glassware, and even camera equipment, etc., to provide comprehensive protection and compensation for the losses incurred by households. However, each insurance company has a different definition of household belongings, so one should carefully read the coverage and details of the insurance product before applying for it.

On the one hand, home insurance plans also provide legal liability protection for the insured, that is, legal liability for third-party injury or property damage due to negligence. For example, when a water pipe bursts at home and damages an elevator in the building, the property owner may have to bear compensation. In this case, home insurance can play a pivotal role in providing financial support for the insured.

On the other hand, "Fire Insurance" is known as "Building Structure Insurance" in full. It is entirely different from the coverage of home insurance. Property owners usually purchase it themselves, or estates purchase it for homeowners. When prospective homeowners apply for mortgages, banks generally require them to buy fire insurance that corresponds to their loan. After settling the loan, they can decide whether to renew the insurance.

The coverage of fire insurance mainly covers the structure of the building itself, such as walls, floors, ceilings, doors, and windows, etc. At the same time, fire insurance will not only compensate for the losses caused by fire but also losses caused by severe accidents such as lightning strikes, flooding, or wind disasters. However, "fire insurance" does not cover household items, and this differentiates it from home insurance.

The scope of protection of home insurance and fire insurance is completely different and is thus complementary. Some home insurance products on the market even provide extended protection for building construction, enabling combined protection from home insurance and fire insurance for building structures and household belongings.

Our home is one of our biggest investments and a sanctuary after a packed day. So naturally, it should be cherished. In addition to purchasing the proper protection, one should remember to check and maintain the basic facilities regularly. There is a wide range of home insurance products on the market, and one can choose different insurance plans based on your personal needs. I hope to educate us on the differences between home insurance and fire insurance so we can make informed choices for home protection.

This Chinese version of this article was published in the Hong Kong Economic Journal.