Property acquisition is probably the biggest investment in one's life. Many look for a home insurance plan that offers comprehensive protection to their residence and its contents. How should consumers choose among a wide variety of plans on offer? The latest survey report released by the Consumer Council comes handy.
The Council's study looked into 25 home contents insurance plans offered by 11 insurance companies and found that premium charges may vary considerably. For instance, annual premium for a 500 square feet unit in gross floor area could cost HK$420 to $1,480.
Premium of a home contents insurance plan is usually determined on the basis of the size of the unit or the total amount insured. Amongst the 25 insurance plans surveyed, 17 calculated premiums according to the gross floor area of the insured units. 5 allowed consumers to choose between premiums determined based on gross floor area or saleable area. The remaining 3 set a uniform premium based on the total sum insured for household contents regardless of size of the unit.
While most plans surveyed had premium payable on annual basis, 8 plans also offered monthly installments, and 3 of which had premium cheaper by 5% when paid annually.
The survey also reveals that both the coverage and sum insured could vary remarkably among plans. The maximum coverage for home contents ranges from $300,000 to $1.6 million per incident or per year. 3 plans surveyed had the total sum insured determined based on the saleable or gross floor area of the unit insured - the bigger the residence, the higher the premium. For some of the plans surveyed, coverage for household contents would be stepped up by 10% to 50% on special days such as Christmas and wedding day of family members, or in typhoons and rainstorm seasons.
All 25 plans offered insurance against legal liability to third parties with coverage ranging from $4 million to $15 million, mainly protecting the insured or his/her household members from personal liability for causing bodily injury or property damage due to negligence inside or outside the residence.
Beside household contents, damages during interior decoration, renovation or maintenances were also covered in 21 plans with coverage ranging from $60,000 to $200,000, or the total sum insured for household contents. Consumers are advised to note that such coverage is commonly restricted to renovation works not exceeding two months or 60 days, or renovation works costing under $50,000 to $300,000.
All 25 plans insure against damages in the course of household removal by professional removers. The maximum coverage ranged from $50,000 to $100,000, or the total sum insured for household contents for certain plans.
A less-noted item was insurance against damage to food due to refrigerator failure or electricity suspension. Most of the plans surveyed offered a maximum coverage from $750 to $5,000. The maximum coverage for the replacement and installation of window and door lock due to burglary, robbery or theft varied from $1,000 to $8,000.
Some home contents insurance plans offered protection against damage or loss of personal valuables of the insured, members of the insured household and domestic helpers, with the maximum coverage from $2,500 to $21,000. Some policies extended the protection to offer global coverage so that the insured's loss of personal property during overseas trips is also covered.
Consumers are also reminded to pay attention to the deductible of the plans, instead of just focusing on the level of premium charged. In the survey, only 1 of the 25 plans surveyed does not carry deductible. For the remaining plans, a deductible of $200 to $1,000 per claim of loss or damage of home contents is to be borne by the insured. If such damage is caused by flood, landslide, ground subsidence, change in interior layout or maintenance project, the deductible may be increased by as much as $10,000, or 10% of the claimed amount, depending on the terms of the plans.
Before applying for a home contents insurance, consumers should be aware that damages caused by illegal structures, gradually-developed situations like leaking, ordinary tear and wear, oxidation and erosion, may be excluded. Personal properties normally exclude contact lens, mobile phone and portable computer etc.
Consumers are advised to consider the following before buying home insurance:
- The total sums insured can be significantly different among different insurance plans, and some plans specify the maximum sum insured for particular household items. Before applying for any insurance, consumers may make a list of what and how much to insure to avoid over or under insuring.
- Some home contents insurance plans cover damage during renovation projects in the insured residential unit, but they usually come with a maximum project duration and sum restriction, and may not cover damages to renovation materials and third party liability. Consumers contemplating a renovation for their units should enquire insurers about this and consider acquiring an insurance plan specifically for such purpose.
- Leaving insured premises vacant for a long period will increase the risk of accidents. Some insurance plans set a maximum length of leaving the premise vacant, so the insured should notify the insurer and get prior approval for prolonged vacancy of the insured residence in order to retain the protection.
- Landlords may buy insurance for their rented premises. Generally, the premiums would be the same as that for self-occupied. But the coverage is restricted and items such as valuables and fragile items are excluded. Enquiries should be made to the insurer.
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