Why Expat Tenants Need Home Insurance

Even before you moved to Hong Kong, you may have heard about the highly unaffordable rent in the city, which always ranks top among the world’s most expensive housing markets. This perennial problem has become so extreme that a resident needs to spend 19.4 years without any other expenditure in order to be able to afford a home, according to the latest Wallstreetcn report. As such, it is a norm for expats to just rent an apartment on a short-term contract.

However, you might have to think twice if you believe that renters do not shoulder any responsibility as a tenant in an unforeseen event. The truth is, even tenants are liable for a range of potential damages and losses, and this is when home insurance comes in handy.

In this feature sponsored by Kwiksure, we are going to shed light on why even tenants need home insurance, the recommended scope of coverages for tenants, and what you should consider when selecting home insurance.

 

Why do tenants need home insurance?

By definition, home insurance is a type of insurance that protects one’s property and home contents against accidental damage or loss, as well as one’s legal liabilities against third-party bodily injury or death.

Contrary to common belief, tenants should not rely on the insurance their landlords’ insurance policies for protection. The reasons for this are threefold:

First, home insurance – as with other kinds of insurance policies – will only compensate the policyholder and any third parties the policyholder is liable to. Consequently, you are not eligible for any reimbursements from the landlord’s insurance policy for damage to your property.

Second, home rental contracts commonly hold the tenant responsible for all fixed installations and furnishing in a rented unit. Therefore, if a phone charger has a short circuit and causes a fire, the tenant may have to compensate the landlord for the losses out of pocket.

Third, in some cases, both the tenant and landlord may need to bear legal responsibility. An example of this is when a precarious window accidentally falls onto the street and hits a passerby. A particularly large amount of third-party compensation may lead to an unaffordable debt, or even bankruptcy. With home insurance, you will be safeguarded against these personal liabilities, whereas you may not be if you rely on your landlord’s policy.

 

The scope of coverage tenants need

Home insurance is commonly comprised of two parts: household and third-party liability; both of which are essential to tenants and landlords.

Household Contents

Be it your household contents or your landlord’s possessions, home insurance normally protects virtually all contents against accidental loss or damage arising from disasters such as fire, flooding, typhoon, or theft. The covered contents include furniture, furnishings, household appliances, computers, stereos, televisions, home video equipment, musical instruments, and more.

One special point to note here regards burglary. In many cases expats are better off financially than locals, or at least perceived to be so. In addition, they may leave the flat uninhabited as they tend to leave Hong Kong more frequently, be it to fly back to their home country, for vacation, or going on a business trip, and are thus more vulnerable to burglary.

Personal Liability

This sort of benefit protects you against any claims for accidental bodily injury or property damage due to negligence on your part in or near your home. In other words, not only does this insurance offer you peace of mind, it also gives you  essential financial assistance, and saves you from paying potentially burdensome amounts of compensation out of pocket.

 

What should you consider when purchasing home insurance?

Benefit limits

Cheaper plans may have lower benefit limits, more exceptions, and/or higher excesses (the amount you have to pay out of pocket before lodging a claim with your insurer).  Therefore, you should check carefully to ascertain that the maximum limit of indemnity is enough to cover your potential losses.

Reputation

More established insurers tend to have a longer history and more insured members. Hence, they usually have a more robust financial foundation, and are less likely to run into profit issues or even bankruptcy. They also tend to have a more stable pattern of premium increases, so you won’t get caught off guard by sudden premium hikes at renewal time.

Scope of coverages

Some insurance policies have a wider scope of coverage, while others may need to have certain benefits added to the plan. It is crucial for you to check that you are getting what you require the most, and not paying extra premiums for something you may not need. Examples of these benefits include:

Worldwide All Risks

This benefit covers your personal belongings and valuables whilst being carried by you up to the sum insured, no matter where you are, such as lost credit cards or stolen wallets.

Valuables

This benefit covers valuables, such as jewelry, furs, and watches, and is usually attached with a limit per item.

Key losses

This benefit covers replacement of locks or windows due to theft or attempted theft.

 

Find your best choice

With so many insurance options available on the market, each with different coverages and premiums, it is hard to find the right insurance solution just by yourself. While the advice of an insurance agent may be biased, an established insurance broker like Kwiksure can offer you impartial and professional advice, leveraging their relationships with different insurers. With almost two decades of experience and nine offices around the world, we specialize in matching quality home insurance products with the needs of our clients. Contact us today to get answers to any questions pertaining to insurance, a free quote, or a plan comparison!