Home Insurance Breakdown: 6 common pitfalls. Is water leakage always covered?

A suitable and comprehensive home insurance policy can provide a safety net for tenants or homeowners, so that when an unfortunate home accident occurs, the insured can receive financial support. However, home insurance has many pitfalls; once an accident happens, the insured may not be able to make a claim, or may need to pay out of pocket before claiming. 10Life has highlighted six major pitfalls of home insurance on the market to help readers pay closer attention.

Storms, heavy rain, burst pipes and leaking appliances can all cause losses to the home. As the name suggests, losses caused by water are referred to as “water damage”. However, different home insurance policies define water damage differently and may also include exclusions. For example, if a burst pipe or a blocked pipe is caused during renovation, or if water or oil leaks from household appliances such as a washing machine or dishwasher while no one is at home, the insured person may not be entitled to compensation.

Table 1: Common water damage exclusions among insurers

During the Typhoon Hato attack on Hong Kong in previous years, a high-rise unit had its glass windows shattered after being struck hard by a suspended work platform, allowing rainwater to enter the flat. In this situation, would home insurance provide cover for the damage caused by shattered glass windows and rainwater entering the home?

Table 1 shows that if heavy rain falls without the Observatory having issued any amber, red or black rainstorm warning or typhoon signal, any resulting loss from rainwater entering the home is very likely not to be claimable. However, if an amber rainstorm warning or Typhoon Signal No. 8 or above is in force, the relevant loss is generally covered.

Many products do not clearly state whether shattered glass in the home is covered. AIG and HSBC state that broken glass items at home, including computer monitors, clocks or ornaments, are excluded, and that minor cracks that do not extend through the entire insured property are also not covered. One Degree, by contrast, states that in general situations such as typhoons and landslides causing glass in the home to shatter, cover will be provided.

Many people purchasing home insurance first look at the premium and sum insured, but the excess should not be overlooked, as it affects the final claim amount. Home insurance often sets an excess for water damage, meaning the amount the insured must bear themselves. Generally, excess is determined by the age of the building or the type of property. The older the property, the higher the excess. The excess for detached houses, semi-detached houses or village houses is also usually higher than that for typical multi-storey residential buildings.

Home insurance policies usually have restrictions on building age. If the building is more than 35 to 60 years old, the insurer may need to underwrite it individually. Generally, if the building is no more than 30 years old, the deductible is usually only around HK$500 to HK$1,000. If the building is over 30 years old, the deductible will increase to HK$5,000 and above, while for properties over 40 years old, it may reach HK$10,000.

Household insurance on the market generally provides partial cover for fixed fixtures and fittings, including interior decoration items such as built-in wardrobes and cabinets, but excluding household appliances.

Products from Dah Sing, AXA Hong Kong and Macau, Zurich and others state that fixed fixtures and fittings belonging to the previous owner or the developer, or the owner’s interior design features, are excluded. If the insured purchases a second-hand property, and cabinets originally provided as part of the standard handover are damaged later on, no compensation will be paid. Some products, such as HSBC, do provide such cover, but only up to 50% of the sum insured.

If a tenant plans to carry out further renovation after moving in, FWD’s product will cover accidental damage to renovations added by the tenant, but a compensation limit applies.

The sum insured for home insurance is classified not only by plan tier, but also by floor area. In general, the larger the unit, the higher the sum insured. Some products, such as AXA Hong Kong and Macau, also set different sums insured according to the type of insured property; for example, the sums insured for multi-storey residential buildings and detached houses may differ.

When taking out home insurance, you should also pay attention to the compensation details, and in particular the compensation limits for each item of household contents. For example, many products impose limits on claims for computers and cash; even if your home is burgled and you lose several hundred thousand dollars in cash, the maximum compensation may only be HK$1,000 to HK$2,000.

The breakdown of sums insured for insured items also varies. Some simply classify them into indoor and outdoor items, while others clearly set out compensation limits for specific types of property, such as red wine, mobile phones and laptops.

Since the outbreak of COVID-19, working from home has become increasingly common, so it is unsurprising to have work-related equipment at home, such as company-issued laptops and smartphones. However, many home insurance policies state that losses and liabilities related to business use are not covered. Some products do provide compensation, but with limits; for example, QBE offers a maximum of HK$2,000 for tools used to earn a living.

Many people buy home insurance just for peace of mind, but if the insured person is going on a long trip, or if the home is left unattended for an extended period, incidents such as burglary may not be covered. Many home insurance policies state clearly that if there is no one at home for more than 30, 60 or 90 days, related claims and liabilities will not be covered.

Before taking out insurance, it is advisable to keep receipts for personal belongings, household appliances and similar items wherever possible. Before making a claim with the insurer, the insured will generally need to submit receipts and other supporting documents; in some cases, a police report may also be required before a claim will be accepted. For some products, whether receipt proof is needed depends on the claim amount.

Finally, home insurance covers a wide range of items, so readers are advised to compare carefully before purchasing. This article provides a summary of some of the main pitfalls in home insurance. For comparisons of different home protection plans, please refer to our earlier article: 【Home Insurance Comparison 2026】Which Home Insurance is Best? A Complete Guide for Owners and Tenants (with Exclusive Actuary Ratings)

To learn more about home insurance products, click to compare more than 30 home insurance plans on the market, with detailed cover and premiums laid out clearly, plus exclusive actuary ratings.

Note: This article was last updated on 22 August 2023.

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.