A home essential for the stormy season: home Insurance

Last month’s heavy downpours officially marked the arrival of Hong Kong’s rainy season. Looking back over the past year, with several “once-in-a-century” black rainstorms and two Typhoon Signal No. 10 warnings, it is clear that extreme weather events are no longer rare anomalies. 

The Hong Kong Observatory predicts that this year’s typhoon season will stretch to October. With gale-force winds and torrential rain frequently causing shattered windows and home flooding, taking early precautions against these potential risks is the only way to ensure true peace of mind. Consequently, an increasing number of people are opting for home insurance to add an extra layer of protection for themselves and their residences.

Home insurance generally covers financial losses resulting from accidents like typhoons and floods. This includes furniture, household appliances, precious jewellery and even smartphones and laptops. In recent years, floor-to-ceiling glass walls have become a popular feature in residential design. However, such structures face a higher risk of shattering during severe weather. To address this, some home insurance policies in the market now cover the cost of repairing or reinstalling window glass damaged by typhoons. Furthermore, the extra expenses incurred for post-disaster debris removal are also included within the scope of protection.

It is also worth noting that if home appliances malfunction due to extreme weather power outages, or if refrigerated food spoils because the refrigerator loses power, the associated losses can be compensated through home insurance. Additionally, some insurance companies provide 24-hour emergency assistance services covering electrical and plumbing repairs, as well as locksmith services, to address the immediate needs of policyholders.

When it comes to enrolment timing, if the Observatory has already announced an approaching typhoon and expects to hoist Typhoon Signal No. 8 soon thereafter, insurance companies generally reserve the right to establish a cut-off time for home insurance applications. Many insurers use the exact time the Tropical Cyclone Warning Signal No. 1 is issued as a benchmark. Any home insurance policy purchased after this point will not cover that specific typhoon, as it is already classified as a “known event”. Therefore, to ensure comprehensive coverage, the most ideal arrangement is to secure your policy well before the storm season arrives.

When a residence suffers severe typhoon damage that requires urgent repairs and renders it temporarily uninhabitable, home insurance covers temporary accommodation expenses, paying for hotel lodgings for the policyholder. At the same time, some thoughtful insurance companies extend this protection even further to include household pets, covering their temporary boarding fees so that owners can manage repairs with absolute peace of mind.

For instance, consider a resident who has beautifully renovated their home. Unfortunately, during a severe typhoon, a glass window in the living room shatters, allowing rainwater to pour in – damaging the walls, flooding the floors and ruining household appliances. The home requires immediate emergency repairs. During this period, the policyholder, their family and their beloved dog must stay in a hotel and a boarding kennel, respectively, for seven days. Because the resident had wisely secured home insurance beforehand and contacted the insurer immediately after the incident, the associated home repair costs (including ceilings, walls, floors, doors and windows), appliance repair or replacement costs, and the temporary lodging fees for both the family and the pet are all covered by the policy. However, it is important to note that for water damage incidents, insurance companies typically require claimants to pay a deductible equivalent to a certain percentage of the total loss value, and this percentage may vary based on the age of the building.

Home insurance protects more than just loss of property; it also includes third-party liability coverage, which becomes exceptionally crucial during a typhoon. If strong winds shatter a window and falling glass shards injure a pedestrian, or if torrential rain causes flooding that damages a public lift, the policyholder could face massive compensation claims exceeding millions of Hong Kong dollars. In such scenarios, “Third-Party Liability Protection” steps in to bear the relevant compensation costs and legal fees. Should an unfortunate accident occur, one should immediately report it to the police, take photographs to document the scene, and notify the insurance company to process the claim.

Furthermore, many tenants mistakenly assume that their landlord’s insurance is sufficient to protect them. In reality, a landlord’s policy does not cover a tenant’s personal property, nor does it encompass the tenant’s third-party liability. It is important to note that if a rented unit is damaged by a typhoon or flood, and any household items or furniture provided by the landlord are ruined, the landlord has the right to seek compensation from the tenant. Therefore, as a tenant, having your own home insurance is equally essential to build a safety net for your home.

With the storm season fast approaching, we must prepare in advance to safeguard our homes. When purchasing home insurance, always read the policy terms carefully. Different insurance companies have varying restrictions regarding property age, which directly impacts eligibility and premiums; it is therefore wise to compare options thoroughly before buying. With the right arrangements in place, you can effectively mitigate property losses and enjoy complete peace of mind, even in the face of extreme weather.

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

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