Is your home safe? Making the case for home insurance

Hong Kong is known around the world for having some of the most expensive property on earth. While our homes may not be very large, they are often highly expensive and contain precious, valuable, and sentimental items.

Over the last 6 months, against the backdrop of political unrest and Covid-19 Pandemic restrictions, home robberies in Hong Kong are up roughly 50 percent against the same period in 2019. During this period there were approximately 1,156 home break ins, and burglars have been targeting residences occupied by a number of high profile targets. Large homes in Stanley, Redhill, Chung Hom Kok, and the Peak have proven to be favorites of criminal elements; in July a senior Swire executive had his peak home robbed with hundreds of thousands of dollars in cash and valuables taken.

More recently, two apartments in a Cheung Sa Wan estate were burgled, with the victims losing over HK$400,000 in valuables and money. Robberies are not only occurring in upmarket neighborhoods, and are not even contained to victim’s homes – a team of criminals robbed a number of people of up to HK$5,000,000 at knife point in broad daylight.

While Hong Kong has a reputation for being a relatively safe place to live, there has been a trend this year of crime increasing – specifically home invasions and burglaries. While the best way to prevent a break in is to use common sense security measures (like locking doors or having a burglar alarm), a determined criminal will likely still find a way in.

Home insurance can help you replace your possessions

In light of the spate of home invasions and robberies that have occurred this year, there is obvious concern that even in the nicest residential neighbourhoods in the city the risk of being the victim of a burglary exists. If you’ve experienced a burglary then it is highly likely that you will have had something stolen, with most criminals preferring small high-value items like jewelry or watches.

Replacing these items can be a headache, especially considering their value. It is not everyone who has the financial wherewithal to replace at HK$100,000 Rolex watch at a moment’s notice. It is in this situation where a Home Contents Insurance plan can be of significant value.

Often referred to as Renter’s Insurance, Tenants Insurance, or just Home Insurance, a Home Contents Insurance policy covers the physical possessions and assets inside your residence against loss, accidental damage, or theft; whether this is a flat, village house, or even standalone Peak Property.

It’s important to note that when we refer to “physical possessions” this includes everything you own. So, if you’re renting your property and you’ve paid for an expensive faucet with a filtration system that burglars decided to damage, this would be considered your property under most Home Contents Insurance plans.

Home contents insurance is the simplest way to ensure that you are protecting yourself against the loss of your valuable and precious possessions. Most Home Contents Insurance products will generally provide a set level of coverage for all the items in your home (normally in the region of HK$250,000) with each individual item subject to a lower sublimit. For example, using some imaginary figures, let’s say a Home Contents Insurance plan has maximum coverage limit for lost, stolen, or damaged items of HK$ 300,000. After a home invasion you have discovered that the thieves have taken your laptop valued at HK$ 7,000 because its depreciated since you’ve purchased it, and a Chopard watch valued at HK$ 156,000.

In this case, let’s say that the Home Contents policy has a sublimit of HK$10,000 for each item being claimed. In the case of your computer you would, under this example, receive the full current value back. For the watch, however, as it is HK$ 146,000 over the item sublimit you would only receive HK$ 10,000 back as a result of having your watch stolen.

At this point it is important to note that a Home Contents Insurance claims scenario can only proceed if you have accurate valuations of the items in question – whether this is via a purchase receipt or official valuation provided via an acceptable 3rd party.

Specified Item coverage goes the extra mile

As our more astute readers will probably have noticed in the above example, while the laptop was covered and can easily be repurchased by the insurance claim, the policyholder was left facing a very large loss on their watch.

In the case of the watch, most standard Home Contents Insurance policies will leave the policyholder with a significant shortfall should the item be stolen and no modifications are made to the policy. So what can be done?

Well, most Home Contents Insurance products will allow the policyholder to nominate “specified items” under the plan which are covered for their full agreed value above any applicable sublimits. This means that were the policyholder to specify the watch under the home insurance plan prior to the burglary then they likely would have been able to receive the full value of the item as a claim after the theft. Again, assuming that the policyholder was able to prove the value.

Specifying an item on a home contents insurance policy will increase the overall premium which you can expect to pay. Having more expensive items covered under the plan will significantly increase the premium.

Specialist Contents Insurance Plans

Under our previous example, the laptop was claimed for HK$ 7,000, the watch having been added as a specified item was now claimed for HK$ 156,000. Assuming that only these two items were stolen during the burglary, this gives us a claim value of HK$ 163,000. As the overall maximum limit of the Home Contents Insurance plan in this example was HK$ 300,000 the claim, in this case, is well under the maximum limit and the full claim would be reimbursed.

However, let’s say that the policyowner had a small Banksy painting in their home valued at HK$ 150,000. If the painting was also included in the policy as a specified item then the addition of its loss in the claim brings the total claim value to HK$ 313,000. This is over the policy’s maximum limit – the policy is only able to reimburse a maximum of HK$ 300,000 in this example. With the loss experienced by the policyholder, they would be HK$13,000 out of pocket after their burglary.

As was the case before we specified our high value items under the policy, the policyholder is now facing a substantial loss in addition to the burglary they just experience.

There is an additional class of Home Contents Insurance products which have been specifically designed to meet the needs of Higher Net Worth clients. Under these policies, the coverage limits will generally range into the tens of millions of dollars, giving you far more protection above and beyond the standard home insurance offering currently available on the Hong Kong market.

Specialist Home “Asset” Policies are more flexible than their more basic policy counterparts. A high-end home asset plan can often enable you to ensure the contents of multiple homes worldwide as long as you are in possession of a residential address in Hong Kong. Additionally, Home Asset plans will include extra policy considerations for specialist collections – whether this is a collection of Magic the Gathering Cards, Classic Comics, Vintage Cars, Rare Wine and Cigars, or more familiar items like Art and Jewelry, its often the composition of a collection as a whole which determines the value.

A collector with a matched pair item who loses only one of the pair will experience just as significant a loss as a collector who loses the entire collection. It is these peculiarities with higher value items that necessitates a higher level of bespoke coverage.

A high coverage level does come with a high cost – if you are receiving HK$ 20,000,000 in protection for a collection, you will expect to pay more for your policy than an individual who is covering an engagement ring, as a specified item, on a policy with an overall maximum limit of HK$ 300,000.

Why should you consider Home Contents Insurance?

Home Contents Insurance is actually a surprisingly diverse form of coverage, with myriad options and variables depending on your needs. While most of us live in high-rise apartments with 24-hour security guards and the feeling of safety is there, the raft of recent robberies at private residences shows that the risk of being the victim of this type of crime is there, no matter what we would like to think.

It is normal that people only consider purchasing home insurance after a life changing event, like an engagement or the birth of a child, but with the trend of home burglaries increasing and criminals becoming more brazen in their activities, losing your valuables can be devastating whenever it happens.

If you would like to learn more about the Home Contents Options available in Hong Kong, please Contact Us to speak with an expert CCW Global Insurance Broker today.