Insuring your home and property against severe weather

Recent Tropical Storm activity in the Pacific Ocean and South China Sea have seen unusually warm weather impact Hong Kong over the last week. On June 1^st 2023 the impact of Tropical Storm Mawar caused more than 12,000 (twelve thousand!) lightning strikes over the course of a 3-hour storm, and prompted the Hong Kong Observatory to issue an Amber Rainstorm Warning.

As the pace of global climate change continues to quicken, Hong Kong is facing a catastrophe. As we move towards the year 2050, the significant weather events experienced in Hong Kong will increase in both number and intensity. From local hail and frost through to super typhoons like 2018’s Typhoon Mangkhut, incidents like last week’s lightning strikes are only going to become more common occurrences.

With the growing instability in global weather obtaining comprehensive insurance coverage is a great place to start when it comes to protecting both yourself and your property from future weather events, no matter where in the world you may be.

Fire and Allied Perils Insurance: A Comprehensive Shield

In the face of escalating weather events, Fire and Allied Perils Insurance emerges as a crucial safeguard for homeowners. This type of insurance provides coverage against losses or damages caused by fire and other related risks, which can be exacerbated by extreme weather conditions.

Specially, Fire Insurance is designed to cover the costs associated with rebuilding or repairing a residence which has experienced a covered loss. However, it should be noted that, in Hong Kong, policyholders have options when it comes to the scope of their coverage.

They can choose to obtain simple fire insurance, which covers damages directly caused by fire. Alternatively, they can opt for fire insurance that covers extended perils, also known as allied perils. These extended perils can include events such as lightning strikes, explosions, storms, floods, and other weather-related incidents.

A straight forward Fire Insurance policy is going to cost less than a policy which is extended to include coverage against Allied Perils and associated risks. However, with most local weather events being related to wind and rain, there is the possibility that a simple fire insurance policy will not offer coverage against the proximate cause of your specific loss. For example, flooding leading to a fire would likely not be covered under a simple fire insurance policy as the cause of the fire was a flood, which is not a covered risk unless extended benefits have been obtained.

Proximate Cause can be confusing; because of this, when it comes to the physical loss of assets like a home, it is often advisable to obtain insurance coverage which offers the widest possible range of protection.

Lightning Strikes: A Spark in the Storm

One of the most common weather-related risks in Hong Kong which is covered under allied perils insurance is lightning strikes. During severe storms, lightning can strike homes and buildings directly, causing immediate fires. The electrical surge can also travel through wiring systems, short circuiting electronics and leading to electrical fires throughout a property.

For instance; consider a scenario where a severe storm hits Hong Kong and lightning strikes a residential building. The lightning's electrical discharge could ignite a fire, causing significant damage to the building's structure and the contents within if it enters the electrical system. The fire could spread rapidly, causing extensive damage before it can be controlled.

In such a case, the homeowner could file a claim with their fire insurance provider. The claim would cover the cost of repairing the structural damage to the building.

Home Contents Insurance: Beyond the Structure

Although fire and allied perils insurance covers the physical structure of a property, it does not typically extend to the contents, or things, within the home.

This is where Home Contents Insurance comes into play; this type of policy provides coverage for personal belongings inside the home, including furniture, appliances, clothing, and other personal items. In the event of a severe weather incident, these items can be damaged or destroyed, leading to significant financial loss.

For example, a fire caused by lightning will need to be extinguished. If this occurs in your apartment then the water damage caused by the fire fighters could actually be worse to your personal possessions than any destruction from the fire. Flooded TVs and waterlogged computers or cameras are going to be expensive to replace (not to mention posing a fire risk on their own!).

Home contents insurance offers a broad range of coverage, ensuring that homeowners are protected against various perils. In fact, many Hong Kong Home Contents insurance products are offered on a Worldwide All Risks Basis – meaning that your stuff is covered against accidental loss, damage, or destruction no matter what happens. This includes coverage for damages caused by storms, floods, and other weather-related incidents.

By securing home contents insurance, homeowners can have peace of mind knowing that their personal belongings are protected.

Additional Living Expenses Coverage

An often-overlooked aspect of home contents insurance is the additional living expenses coverage offered by many policies.

This coverage kicks in if the insured property uninhabitable. Whether this is from a severe weather event, or human error, it covers the cost of temporary accommodation, meals, and other necessary expenses while the insured property is being repaired or rebuilt. This can be a significant financial relief during a challenging time especially for individuals who are renting their home and may have already paid a significant sum in rental expenditures.

Further to this, it is possible to obtain Home Contents insurance products in Hong Kong that provide coverage against the food in your fridge spoiling. While power outages are not that common in this city, as freak weather events increase in occurrence the likelihood that Hong Kong is impacted by a blackout due to a weather event also increases.

Personal Accident Insurance: Financial Support in the Face of Tragedy

While fire and allied perils insurance and home contents insurance provide coverage for property and belongings, Personal Accident Insurance focuses on the individual. This type of insurance provides a lump-sum payment in the event of an accident resulting in serious injury or death.

In Hong Kong, where there is an average of 20,000 car accidents each year, personal accident insurance is not just a wise choice, but a necessity. This necessity becomes even more evident when considering the growing risk of severe weather on every day life. Personal Accident Insurance coverage provides financial support in the face of tragic scenarios that could leave you injured, permanently disabled, or even result in the loss of vital organs or limbs.

Understanding Personal Accident Claims

The coverage offered under a personal accident policy in Hong Kong varies depending on the insurance company you have chosen to purchase your policy from, but typically includes injuries such as loss of limb, permanent blindness in one or both eyes, paralysis, loss of hearing in one or both ears, serious burns, and accidental death.

The settlement provided to an individual who has suffered an accident leading to loss of hearing in a single ear will be less than the settlement provided to an individual who has suffered permanent disablement of an arm (loss of limb). However, both of these settlements will be lower than that which is provided to the beneficiaries of an individual who has died an accidental death.

In simple terms, the more serious the injury or disablement of the policyholder, the higher the lump-sum payment they will receive. In some cases, personal accident policy options can also offer coverage for lifestyle and medical needs of the individual following the incident which left them injured. Expenses including domestic service assistance, home adaptation requirements, and even retraining expenses for the insured to learn a new occupation may be offered depending on the policy you choose to obtain.

Being hit by a flying piece of debris during a typhoon has the potential to cause a significant injury. The same is true for experiencing a direct lightning strike, or being caught in a flash flood. As severe weather becomes ever more common, so does your risk of injury… or even death.

Protect Your Property from Weather Instability

In the face of escalating weather events and the growing instability in global weather, obtaining comprehensive insurance coverage is a great place to start when it comes to protecting both yourself and your property from future weather events. With fire and allied perils insurance, home contents insurance, and personal accident insurance, you can have peace of mind knowing that you are well-protected no matter what the Observatory predicts.

For more information about insurance in Hong Kong, or to find out additional details about Hong Kong Property Insurance, please Contact Us Today.

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