What Precisely Does Homeowner’s Insurance Cover? What’s Included?
Let’s get in to more detail about the coverages that are typically included in homeowner’s insurance. Standard home insurance policies will generally include coverage for your home contents, home structure, liability, other additional structures and living expenses.
• Home Contents -As stated above, home contents coverage includes all your belongings that are damaged or destroyed. This type of policy is typically set in the range of 50%- 70% of your home’s structural coverage. For items of higher value that you own, such as expensive jewellery or art pieces, there tends to be a cap on the repair/replacement value. The cap is depending on the policy as well. If you wish to get more coverage for such higher-valued items,you will need to up your insurance policy on a case-by-case situation.
• Structural -Structural coverage is for any damages or destruction to your home that needs to be repaired or rebuilt, in which case, your insurance policy will help pay for these expenses. You should set your structure coverage in the amount that it would take to rebuilt your home from the ground up (not the same as the amount you paid for your home).
• Liability - This one is really important but often goes unnoticed. If you cause damage to anyone on your property by accident or if someone gets injured on your property, the liability insurance policy can help cover the expenses for medical, rehabilitation,and/or funeral costs. It’s generally better to set your liability policy higher - especially if you home includes anything that can lead to accidents - such as a swimming pool, trampoline, or if you live on the top floors of a skyrise where accidents can be prone to happen. Maybe you don’t think it’s important to have liability insurance, but do keep in mind that should any accidents happen on your property - medical and legal costs can really add up and set you back rapidly.
• Additional Structure - This is less common in Hong Kong because most homes are apartments, but for homes where there is a detached house, garage, shed…etc,this insurance policy will cover any destruction caused by peril. Your insurance policy will help offload the expenses need to repair and rebuilt the additional structures that are a part of your home.
• Additional Living Expenses - Again, (Knock on wood!), if in an unfortunate turn of events that your home is destroyed due to fire hazards, water hazards or other environmental hazards and needs to be rebuilt, this type of coverage can help pay for your living expenses in the mean time - such as hotel and food bills for the duration of time that you do not have a home to live in.
What Are Covered Perils? What Does it Cover?
Covered perils are the cases of loss in an insurance policy. The standard home insurance policies which usually include any damages caused by fire (the most common), tornadoes, windstorms, lightning strikes, theft, vandalism, explosions,riots and other potential disasters. Coverage can be provided either on an “all perils” basis or a “named perils” basis. What’s the difference between the two policies?
• Named Perils -policies that list exactly what is covered
• All Perils -policies that list exactly what is excluded from coverage
These are the standard types of disasters that are covered by most homeowner’s insurance, but it’s important to double check with your insurance policy for the specific perils that are covered and what your area is most at risk of:
• Fire or lightning
• Windstorm or Hail
• Riot or Civil Commotion and Unrest
• Damage caused by aircraft
• Damage caused by vehicles
• Vandalism or malicious mischief
• Volcanic eruption
• Falling object
• Weight of ice,snow or sleet
• Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance
• Sudden and accidentaltearing apart, cracking, burning, or bulging of a team or hot water heating system, an air conditioning or automatic fire protective sprinkler system, orof a household appliance
• Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)
• All perils except flood, earthquake, war, nuclear accident, landslide, mudslide, sinkhole, and others specified in your policy. (Check your policy for a complete list of perils excluded
Although disasters such as flood and earthquakes are typically not covered by standard home insurance policies, you can get a separate policy that specifically covers them. Luckily, Hong Kongers don’t have to worry too much about environmental disasters since there aren’t many natural hazards here in comparison to high risk zones like Tokyo and California (Earthquake Central) or the Mid-West in The U.S where tornadoes and hurricanes are prone to happen.