From leaks to luxuries: what home insurance can do for you

With climate change bringing ever heavier rains to Hong Kong, a common headache for many homeowners is the prevalence of wall and ceiling water seepage. In 2023 alone, the Seepage Office received around 45,000 reports, and countless unreported cases suggest the issue is far more widespread than previously thought.

If you want to avoid the financial strain that seepage can cause, getting insurance for your home is a smart move. These policies offer more than just basic protection. They cover household belongings, valuables, typhoon-related window damage and even 24-hour emergency support. With such broad coverage, you can rest assured that your home will be in good hands.

In the world of insurance, “water damage” refers to all kinds of losses caused by water, including heavy rain, burst pipes and washing machine leaks. Most home insurance policies cover wall and ceiling seepage, along with any resulting damage to property or injuries.

However, there’s usually a deductible – often called an excess – which means you’ll need to pay part of the costs yourself before the insurer steps in. That amount will depend on the age of your property; older buildings tend to come with higher deductibles.

Imagine a customer who bought a brand-new apartment last year and insured it right away. Their water damage deductible was set at HK$1,000-2,000, or 5% of the total loss. When an unexpected pipe burst caused severe flooding, it damaged the walls, floors, furniture and appliances, making the home temporarily uninhabitable during the period when repairs were carried out. The insurer covered approximately HK$80,000 for damages, repairs and temporary housing, while the policyholder contributed HK$4,000 under the terms of the policy’s deductible.

It’s worth noting that if a pipe bursts due to its age, or wear and tear, it is usually considered “natural wear and tear” and falls under the policy’s exclusions. In such cases, insurers won’t cover the repair costs for the faulty pipes.

In recent years, home insurance has become much more flexible, with coverage now extending to outdoor furniture (including patio tables, washing machines and refrigerators), electronic payment cards, such as your Octopus card, online shopping issues, and even accidental damage to devices such as phones and tablets – anywhere in the world. Insurers are also adapting to meet the needs of modern families by offering protection for domestic helpers and pets. For instance, personal liability coverage now includes incidents where a helper’s negligence results in third-party injuries or damage to property. Similarly, if your home becomes uninhabitable, temporary housing coverage may also include boarding costs for your pets, ensuring everyone in the family is looked after.

With so many enhanced features and optional add-ons now available, it’s a good idea to fully understand your policy and prioritise essential coverage. Once you’ve got the basics sorted, you can explore upgrades to suit your needs.

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

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