What does home insurance actually cover? How do you choose the home insurance product that best suits your needs?

In Hong Kong, the annual typhoon season often results in broken or leaking windows in people’s homes. Meanwhile household fires and burglaries are also common occurrences, leading to unexpected losses for both landlords and tenants. To ensure your home is fully protected, it is essential to have comprehensive home insurance. But with so many options available, what exactly does home insurance cover, and which policy is best suited to your needs? This article explains the various coverage options and provides a detailed comparison of home insurance policies to help you make the right choice.

Before taking out home insurance, many people may wonder if they really need it because they already have fire insurance. The answer is yes. Home insurance and fire insurance cover completely different things: one protects the building’s structure, while the other safeguards your belongings. Having both ensures you have comprehensive protection.

Fire insurance taken out by landlords doesn’t cover tenants’ personal belongings. So even if you are a tenant, home insurance is still important. It not only protects your furniture, appliances and personal belongings but, more importantly, it provides coverage for legal liability and compensation costs if your negligence causes loss or damage to others.

To understand what home insurance covers, we can break it down into a few key categories. A comprehensive home insurance policy can extend beyond your home to provide worldwide protection, encompassing many aspects of everyday life. The most common coverage items fall into 6 main categories, illustrated here using MSIG iHome Insurance as an example:

A. Basic coverage

Basic coverage protects your important belongings at home from common risks, such as fire, typhoons and theft. This includes:

• Household contents coverage: Protects against loss or damage to furniture, appliances, clothing and other belongings in your home. For example, with MSIG iHome Insurance, the maximum benefit is HK$1,000,000.

• Valuables coverage: Provides coverage for high-value items such as jewellery, watches and artwork, with the maximum benefit being HK$15,000 per item.

• Damage to window glass during typhoons: Damage to window glass during the typhoon season is also covered. The maximum benefit is HK$10,000.

• Costs of replacing damaged door locks: If a break-in causes damage to door or gate locks, the cost of replacement is covered up to HK$2,500.

• Coverage for frozen food and drinks: You can claim up to HK$5,000 if food or drinks spoil due to a refrigerator breakdown or a power outage.

   

B. Liability insurance

Liability coverage is a key component of a home insurance policy, protecting you against costly claims resulting from negligence:

• Personal liability: Covers legal liability for injuries or property damage to others caused by negligence. For instance, MSIG iHome Insurance covers common situations such as water seepage, burst pipes that damage public lifts, and falling windows, with a maximum benefit of up to HK$8,000,000.

• Domestic helper liability insurance: If you employ a domestic helper, this coverage also protects you against employer’s liability for accidents caused by your helper’s negligence while at work. MSIG iHome Insurance includes this coverage at no additional cost, with protection of up to HK$8,000,000.

   

C. Temporary accommodation and related expenses after an accident

If your home becomes uninhabitable due to a serious incident, such as a fire or flooding, the insurance will cover temporary living expenses for you and your family (including your pets). This includes:

• Temporary accommodation expenses: Covers the cost of staying in a hotel or serviced apartment. With MSIG iHome Insurance, the maximum daily amount payable is up to HK$1,500.

• Temporary pet boarding expenses: In the aforementioned situations, the cost of temporary pet boarding is also covered, with a maximum daily amount payable of up to HK$3,000 (the maximum total benefits payable for both expenses is HK$50,000).

   

D. Extended coverage

A comprehensive policy goes beyond the walls of your home, extending protection to wherever you are in the world.

• Worldwide coverage for personal belongings and electronic devices: Even when you’re outside Hong Kong, you’re still covered for accidental loss or damage to personal belongings and electronic devices, such as handbags, cameras, mobile phones and laptops. With MSIG iHome Insurance’s optional benefit of worldwide coverage, personal belongings are covered up to the sum insured, while accidental damage to mobile phones is covered up to HK$2,500, and tablets or laptops are covered up to HK$5,000.

• Coverage for moving and temporary removal:

  - Moving coverage: Accidental loss of household items during a move with a professional moving company, up to HK$100,000.

  - Temporary removal coverage: Accidental loss or damage to household items removed from your home to any other premises in Hong Kong is covered up to HK$50,000.

   

E. Extra coverage

• Online purchased goods coverage: Covers items purchased online that are accidentally lost or damaged during delivery, with up to two claims per year and a maximum of HK$1,500 per item. The maximum benefit for each occurrence is HK$10,000.

• Eco living coverage: If a covered appliance is damaged beyond repair and you replace it with a product that has at least a Grade 2 energy label, you’ll receive an additional payout of up to HK$1,000.

   

F. Emergency support

• 24-hour home emergency assistance: In the event of an emergency, such as burst pipes or a power outage, you can access a 24/7 referral services for urgent repairs, which includes plumbers, electricians and locksmiths.

Now that you know what home insurance covers, the next step is choosing the right policy. If you’re wondering which home insurance plan is best for you, here are three key considerations to keep in mind when comparing different policies.

(1) Is the coverage suitable for your needs?

There is no such thing as a good or a bad policy; the best policy is the one that suits your needs. Before comparing home insurance plans, you should first consider your circumstances and lifestyle to determine which areas of coverage matter most to you.

• If you’re a homeowner living in your own property, ensure the total sum insured is sufficient to cover the full value of your furniture and appliances.

• If you’re a landlord, consider a Landlord Protection Plan, which provides additional coverage for loss of rental income and items you provide for your tenants.

• If you’re a tenant, focus on coverage for your personal belongings and third-party liability, and consider a Tenant Protection Plan designed specifically for renters.

• If you’re a pet owner, check whether the plan includes coverage for “temporary pet boarding expenses”.

• If you own high-value collectibles, pay special attention to the per-item compensation limit under the “valuable items” category.

• If you travel frequently, focus on the coverage and limits provided under the “worldwide personal belongings” section.

   

(2) Look beyond the price: weigh up the insurance premium, building age and potential expenses

Price is undoubtedly an important consideration, but it’s even more crucial to understand the fine print that affects your coverage. When comparing home insurance plans, you should pay attention to the following three factors:

• Deductibles: This is the amount you have to pay out of pocket for each claim. Don’t just opt for the cheapest premium. Check the deductible amounts for different situations (such as water damage or personal belongings) and choose a plan that balances the level of risk and your budget.
• Building-age limit: Different insurers have varying age limits for buildings, which can directly affect your eligibility and premium.

• Third-party liability coverage: Often overlooked, this can pose the greatest financial risk. It’s advisable to choose a plan with high coverage limit to protect against costly claims resulting from incidents, such as water leaks or burst pipes.

   

(3) Pay attention to the claims process and any exclusions

The true value of a policy only becomes clear when it’s time to make a claim.

• Claims process: Compare whether each insurance company offers a convenient and efficient claims process. For instance, MSIG EASY Claims allows customers to submit claims online 24/7 without the need for paper forms. You can track your claim in real time, making the process simple and transparent, and receive comprehensive support through a dedicated claims hotline.
• Understand the exclusions: Make sure to review the key exclusions in your policy, such as natural wear and tear of the building. A reputable insurance company will clearly outline these terms to help set realistic expectations and avoid future disputes.

Through real claims examples, you can gain a clearer understanding of how comprehensive home insurance offers protection in various situations.

Example: home contents protection during a typhoon

The glass in Mr Chan’s living room window is cracked during a powerful typhoon. This leads to severe water damage around the windows and results in damage to the wall and floor, as well as the nearby television and audio system. Also, his home requires repair works, rendering it temporarily uninhabitable. As such, Mr Chan is forced to stay in a hotel for seven days. 

In this situation, comprehensive home insurance can play a key role, covering various types of losses:

• Home contents: HK$68,600 (including the maintenance cost for the wall, floor and electrical appliances).
• Breakage of window glass during typhoon: HK$6,200.
• Alternative accommodation: HK$5,600 (HK$800 x 7 days).
• Eco living coverage: HK$1,000 (as Mr Chan has replaced his old television with a new, Grade 1 Energy Label Product recognised under the Mandatory Energy Efficiency Labelling Scheme).

After deducting an excess of HK$4,020 for water damage (HK$1,000 or 5% of the loss, whichever is greater), Mr Chan receives total compensation of HK$77,380, which greatly alleviates the financial burden caused by the incident.

In different situations, please remember the following four key points when filing a claim:

1. Notify promptly: Inform the insurance company as soon as possible after the incident occurs.
2. Preserve evidence: Take photos or videos of the damaged property and try to keep the relevant items.
3. Prepare documents: Gather proof documents, such as purchase receipts and repair quotes.
4. Do not settle privately: If third-party liability is involved, do not privately admit liability or make compensation promises; you should notify the insurance company immediately and it will handle the situation on your behalf.

1. Does home insurance cover damage caused by renovations?

MSIG iHome Insurance covers accidental loss or damage to your home items during repair, renovation or maintenance work. However, the duration of the project must not exceed 2 months, and there are limits on the contract value. Additionally, the work must not involve any changes to or removal of supporting structures. Risks during the renovation (such as loss of materials or accidents involving workers) are typically not covered. If you need coverage for these risks, consider purchasing separate renovation project insurance.

2. If my home suffers from accidental leaks or seepage that affects the downstairs neighbour, will home insurance compensate for this?

Yes. This is precisely the key purpose of the “third-party liability” coverage in home insurance. It covers the legal responsibilities and compensation required for damage to a neighbour’s property caused by negligence.

3. Does home insurance cover all items stored in the home? Are there any special limitations for valuable items (such as jewellery, watches or collectibles)?

Home insurance generally covers the vast majority of household items, but there is usually a “per-item compensation limit” for valuable items. For example, MSIG iHome Insurance has a maximum compensation amount of HK$15,000 for each valuable item. Before taking out the policy, you should assess the value of your belongings to determine if additional coverage is needed.

4. If a foreign domestic helper causes injury to others due to negligence, will home insurance cover the related liability?

Yes. The MSIG iHome Insurance plan includes domestic helper liability coverage at no additional cost. If a domestic helper causes injury or property damage to a third party due to negligence while working, the legal responsibilities the employer must bear are also covered.

The product information provided above is for reference only. For details on coverage and policy terms, please refer to your insurance policy.