Fire Insurance Protection in Hong Kong
Any property insurance will only cover loss of or damage to the insured physical property. The insurance cannot cover non-physical factors such as location and land space which influence the market price off the property. This means that fire insurance covers up to the physical rebuilding cost of the property (in the event of total loss).
However, most mortgagers do not clarify this, and will often request that the full outstanding mortgage amount is insured. It can be difficult to determine the rebuilding cost of a property without a survey (which can be expensive), and the insurers in Hong Kong will not advise on the sum to be insured. We would usually advise that the sum insured (the amount of cover on which the premium is based) should be the outstanding mortgage amount (if required by the mortgager) or the rebuilding cost of the property, whichever is greater, to ensure that your property is still covered even as the mortgage loan reduces over time.
Fire insurance can be taken for almost any type of property – it is not limited to buildings. For example, it is often taken for warehouse stock or equipment, and even home contents (although the specific home insurance packages provide more comprehensive cover).