What is insurance?
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Further Reading
Around the world there are many different types of insurance product. From property and casualty plans (including Home Insurance and Car Insurance), to Life insurance, and even Professional and Financial Insurance products (including Professional Indemnity and Employees’ Compensation), sometimes it can seem like there is insurance for literally anything.
But what is insurance? What is its purpose? And what does insurance do?
Understanding Insurance
Insurance is strictly defined as the equitable transfer of risk from one party to another, in return for an agreed upon fee.
That is it. That is the definition.
In principle, this is as complicated as insurance needs to be: you think you are at risk of suffering a loss of some sort, so you ask the insurance company to take that risk away from you. The insurance company agrees to take that risk, but only if you pay a fee (also known as a premium). Should the risk you are concerned about ever be realized, then the insurance will compensate you for any losses you experience.
For example, when you’re driving a vehicle the biggest risk facing you is that of being in an accident. If you were responsible for that accident, then you are going to be liable – that is to say, “responsible” – for fixing any damage you caused. Car insurance transfers this liability to the insurer. So, when you do get into an accident, the insurance will pay the costs of any damages, rather than you needing to personally pay.
Why do you need insurance?
In most cases you do not need insurance. In actual fact, in Hong Kong there are actually only two universally required types of insurance:
Every other type of insurance is normally purchased on an as-needed basis. For example, if you are buying a property, it is normal for the bank or mortgage company to ask that fire insurance be obtained on the property before approving the sale.
As to why you would ever buy insurance? Well, insurance can be incredibly useful, especially when bad things happen. Unfortunately, in the modern world, bad things can happen a lot.
Uses of Insurance
While you may not be required to take out insurance in Hong Kong (unless you own a car or employ anyone to do a job), insurance can come incredibly useful in worst-case situations. From personal life to business endeavors, insurance plays a vital part in every day risk-management and financial planning.
Health Insurance in Hong Kong
Health insurance will cover the costs of medical treatment you receive. In essence, you pay the insurer a premium and they will finance your future healthcare.
Health Insurance can come in handy if you choose to use any private medical facilities in Hong Kong. This is due to the fact that private medical costs in the city are some of the highest in the world, and seeking treatment at a hospital like the Adventist, Matilda, or Sanitorium can be extremely expensive without insurance protection.
However, because of Hong Kong’s high-quality public healthcare system, health insurance is not a required purchase.
Learn more by clicking Hong Kong health insurance.
Home Insurance in Hong Kong
Unless you have purchased a home in Hong Kong with a bank mortgage, there are almost no requirements for home insurance coverage in the city. Renters are generally never asked to purchase Contents Insurance coverage as a condition of their lease.
There are two types of Home insurance;
More applicable to the majority of Hong Kong residents will be renter’s insurance. This type of coverage will protect you in the event that your valuables are lost, stolen, or damaged. You pay the insurer a premium, and should you suffer the loss of your physical possessions, the insurer will reimburse you to obtain replacements.
Learn more by clicking Hong Kong Home Insurance.
Professional Insurance In Hong Kong
Professional Insurance products work in much the same way as personal lines – a business or company pays the insurer to take on a certain risk. In the event that the risk materializes, the insurer compensates the business for its loss.
From the issue of giving bad advice to customers with Professional Indemnity Insurance, through to the risk of employees injuring themselves while on the job with mandatory Employees’ Compensation Insurance protection, there are many, many different coverage solutions available to business in Hong Kong.
Professional insurance products can cover the full range of business risks facing companies both in Hong Kong and across the world, and can be obtained for Cyber Threats, Office Contents, Shipping and Cargo, and many more.
To learn more please click Hong Kong Business Insurance.
Insurance in Hong Kong
While there are only two types of compulsory insurance purchases in Hong Kong, taking out an insurance policy against any of the risks you face in your daily life can be a very good idea. From estate planning and taking care of your family with Life Insurance, through to ensuring you’re able to have a good vacation with travel insurance, it is never a bad idea to protect yourself.
Ideally, the best insurance plan is one that you never have to use. You never want to face a loss; whether that is a fender bender car accident or something more serious, most people want a simple and easy loss-free life. But it is, unfortunately, impossible to avoid losses entirely – so insurance exists. In the event that you face the realization of a risk in your life, it is better to have the support you need than chance not needing it.
For more information about insurance in Hong Kong, or to request a free quotation comparing any of the products offered by CCW Global, please Contact Us to speak with an expert broker today.
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