Home insurance: a win-win for homeowners and renters

Based on the latest government statistics, the number of tenants in private housing in Hong Kong is now approximately 1.2 million, reflecting a growth of over 20% since 2010. With more rapid urban development and population growth on the horizon, there is likely to be a corresponding upswing in the private residential rental market. Regardless of whether you are a landlord or tenant, acquiring a suitable home insurance policy is paramount for safeguarding your property, belongings and the well-being of your family.

There is a common misconception, among some tenants, that purchasing home insurance is solely the responsibility of the landlord who own the property. However, this is not the case. Home insurance primarily provides coverage for unforeseen accidents, such as fire, typhoons, floods, landslides, theft and more. It also covers losses resulting from accidental damage to household items during home renovation and improvement projects. In the event that the any household items or furniture provided by the owner are damaged due to the aforementioned circumstances, the landlord may be able to seek compensation from the tenant.

Some insurance companies offer “tenant protector”, specifically tailored for renters. In general, these policies also cover the scenarios mentioned above. Additionally, certain insurance providers also offer “security deposit protection” for insured tenants. In the unfortunate event that a landlord goes bankrupt and cannot return the rent deposit, the insurance company will provide compensation as specified in the coverage. Moreover, if the rental unit becomes temporarily uninhabitable due to an accident, these policies usually offer alternative accomodation coverage or compensation for rent while repairs are carried out. These comprehensive measures aim to safeguard the rights and interests of tenants.

Home insurance is a familiar concept for most homeowners. It offers protection against loss of property, including damage to decorations and electrical appliances supplied by the owner. In addition, there are insurance companies in the market that offer customised “rental protection” to cater to the needs of homeowners. For instance, rental loss protection ensures that if a tenant defaults on the rent, the insurance company provides corresponding compensation.

Conflicts between landlords and tenants often arise when equipment or furniture in the rental unit get damaged. A common scenario is when tenants undertake minor renovations or home improvements but accidentally damage electrical appliances during the process. In such cases, certain products in the market provide “landlord protector” for the owner. As long as the renovations fall within the specified project time and contract value covered by the insurance, the insurance company will usually compensate the insured owner for any losses incurred due to the contracted project.

Property owners should carefully review the terms and conditions of their insurance coverage. It is worth noting that insurance companies may not provide coverage for subdivided or sublet units, or units in buildings known for having such divisions. Moreover, products often won’t extend coverage to commercial or holiday homes, or units containing illegal construction. When in doubt about the protection of a unit, it is worthwhile consulting your insurance company directly. Whether enquiring as a tenant or an owner, the priority is to ensure the safety and security of the property. By obtaining appropriate home insurance, individuals can safeguard their interests, minimise disputes and conflicts, and foster a harmonious living and working environment for a win-win result.

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

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