The Hong Kong Insurance Guide
Hong Kong, Asia’s World City, is able to provide an endless array of insurance options to residents. From newly arrived expatriates on short term postings from their home countries, to long term permanent residents and citizens, many people can find it challenging to navigate the entire range of available Hong Kong insurance products.
Knowing which plans are required by the government, which are not mandatory but may be nice to have, and even which coverage options are completely unnecessary can be tough. Thankfully, this comprehensive guide to insurance coverage in Hong Kong will give you all the information you need to know about your protection options in the city.
Car Insurance in HK
One of the more common types of coverage in Hong Kong is Motor Insurance protection.
If you own a car then it is a legal requirement by the government of the Hong Kong Special Administrative Region (SAR) that you possess an insurance policy on the vehicle covering your risk of getting into an accident. However, there are a large number of options with regards to car insurance coverage in Hong Kong, with many different Insurance Providers offering this type of policy, and it is important to note that there are actually two different types of car insurance policy available in the city:
Third Party Car Insurance
The first, and most basic type of Hong Kong Car Insurance plan is known as a Third Party Car Insurance Policy.
This type of motor vehicle insurance plan will cover you for your liability to third party injuries (or deaths) in the event of an accident. Although these types of policies only have to protect you against your liability of injuring or killing someone during a traffic accident many insurers will also include Third Party Property Damage coverage as standard within the plan.
Under Hong Kong law a Third Party Car Insurance Policy is the minimum legal requirement for motor insurance coverage.
Comprehensive Car Insurance
The second type of car insurance policy offered in Hong Kong will include the coverage offered by a Third Party insurance plan, but will also offer protection against damage to or the loss of your own vehicle. Hong Kong car insurance policies which include coverage of damage to, or the loss of the car in addition to the required Third Party protection are known as Comprehensive car insurance plans.
While a Comprehensive car insurance policy will provide higher levels of protection over Third Party plans, it is important to note that the premiums associated with comprehensive cover are usually higher than those offered via third party coverage. As such, it may not be worth obtaining a comprehensive insurance policy on your vehicle unless you have purchased a new-model car or are driving a high end, exotic vehicle.
Health Insurance in Hong Kong
One of the great parts about living in Hong Kong is the fact that the city has an excellent public healthcare system, which is able to provide low cost healthcare services to residents due to the fact that it is subsidized by the HK government. As such, having a medical insurance plan in Hong Kong is not absolutely necessary, and depending on your situation could be actually be a needless expense.
However, if you decide to look for health insurance coverage for the duration of your stay in the city (or an even longer period of time) you should be aware that there are actually two very distinct types of health insurance plan available in Hong Kong.
Local Health Insurance in Hong Kong
The first type of medical insurance coverage available in Hong Kong is that which is typically known as “Local Health Insurance.” Simply put, local health insurance plans are designed to protect you only within the borders of Hong Kong, meaning that if you require healthcare protection whilst overseas you will typically have to purchase short-term travel insurance plans.
Local Health Insurance policies in Hong Kong are often extremely cheap when initially purchased. This is due to the fact that these plans will normally calculate their premiums based on the policyholder’s claims history, and at the initial purchase the policyholder will not have any claims history with the plan; leading to the lowered cost. However, any claims made via a local health insurance plan will normally mean steep premium increases when the policy is renewed.
Furthermore, there are often significant limits placed on local health insurance policies in Hong Kong, and even should a policy of this type provide a high overall maximum benefit there will normally be strict sublimits placed on specific benefits. These restrictions are compounded by the fact that many Local Hong Kong health insurance policies will limit the age at which the policyholder is able to continue the coverage – usually capping the ability to renew the policy at 65 years of age, meaning that such a plan may not be able to provide comprehensive protection for as long as it is needed.
International Health Insurance in Hong Kong
The second type of medical insurance plan widely available in Hong Kong is that which is normally referred to as “International Health Insurance,” or “International Private Medical Insurance” (IPMI) coverage. In contrast to local health insurance plans, an International policy has the ability to provide global healthcare protection; offering comprehensive coverage against the cost of medical treatment anywhere in the world, and not just within the borders of a single country.
Typically more expensive than a local health insurance when initially purchased, international health insurance policies do not use a policyholder’s claims history to calculate renewal premiums. Instead, premiums are calculated based on your age and the plan’s geographical area of coverage. This means that while the premiums will increase as you age, the increases are much more consistent and manageable over the long term than the sudden spikes seen with local health coverage.
On top of this, IPMI policies in HK will generally have extremely high coverage limits (often exceeding US$ 1,000,000 or more per policy year), and many companies offering international health insurance plans will usually guarantee the renewability of the policy for the entire life of the policyholder – ensuring that the coverage is there as and when it is needed. While international health insurance plans are usually more expensive than their local counterparts there can be a significant benefit in choosing this type of policy as an IPMI plan will often provide higher levels of flexibility than a local one.
Domestic Helper Insurance in Hong Kong
One of the more unusual aspects of life in Hong Kong is the fact that almost everyone you meet will employ a domestic helper, also known as a maid, to help with housework, cooking, and looking after the family’s children. Often from the Philippines or other South-East Asian countries, Maids in Hong Kong are often paid far less than domestic helpers in the USA or UK at a minimum wage of HK$3,920 per month (US$505.42).
However, the Hong Kong government requires that all employers in the city, including employers of domestic helpers, purchase an Employee Compensation insurance policy on their staff to cover the risk of the employee suffering from an accident or falling sick during the course of their normal working duties.
Because of this legal requirement many Hong Kong insurance companies offer a Maid Insurance plan which includes Employee Compensation Insurance coverage; satisfying the legal minimum for coverage of the domestic employee. In addition to this many of these Maid Insurance plans can be purchased with a range of additional coverage options, including protection for Dental, Medical, and even Repatriation benefits.
No matter whether you choose to purchase an Employee Compensation Maid Insurance plan, or a more expansive and comprehensive Maid Insurance policy to cover your domestic helper in Hong Kong, you must obtain protection for your helper in the event that they suffer ill health effects due to their job.
Hong Kong Home Insurance
Just as there are two types of Health Insurance policy available in Hong Kong there are actually two very distinct options for coverage with the products that many people simply consider “home insurance;” and as Hong Kong has some of the most expensive real estate prices in the world, you’re definitely going to want to consider obtaining some form of protection on your property.
The first type of home insurance coverage widely available in HK is known as “Fire Insurance.” This type of policy will provide coverage for the rebuilding costs of your property in the event that it is damaged because of a fire. While the basic policy will provide coverage for Fires only, this type of Hong Kong insurance plan can often be expanded to include coverage for a range of allied perils, including Typhoons (hurricanes), Flooding, and other natural disasters common to the region.
If a Fire Insurance plan includes this additional coverage it is then known as a Fire and Allied Perils Insurance policy.
Typically only purchased by individuals who actually own their homes, purchasing a Fire insurance policy in Hong Kong can be a requirement from local banks in the event that you are financing the purchase of your home through the use of a mortgage.
Home Contents Insurance
If you’re renting your home in Hong Kong (which will probably be the category the majority of people reading this article fall into) then you don’t need to worry about fire insurance coverage as your landlord will have already purchased this to cover his property. However, you may want to consider protecting your personal possessions including TV’s, Photography equipment and cameras, jewellery, clothing, art, and any other items you value.
Normal Home Contents insurance plans in Hong Kong, which are also known as Tenants Insurance or Renters Insurance policies, will cover your household possessions on an “All-Risks” basis; meaning that you are protected in the event of your items suffering damage because of flooding, fires, explosions, or even if your possessions are stolen in an act of theft. All Risks coverage will provide protection against any risk which may result in the damage to, or loss of your possessions unless specifically excluded from coverage in the policy wording.
Additionally, many of these policies can be expanded to offer the All-Risks coverage on a Worldwide basis, which means that even should your laptop be lost or stolen while you are on a business trip overseas, your home contents insurance policy will be there to cover that event.
Life Insurance in HK
The final major type of Hong Kong insurance product that you need to know about is Life Insurance. We won’t be going into too much detail here, however, as Life insurance doesn’t really change that much around the world and if you’ve purchased a life policy in the USA or EU then you’ll be familiar with how these plans operate in Hong Kong.
The first thing you need to know in regards to life insurance in Hong Kong is that this kind of coverage is not mandatory. The second thing you’ll need to be aware of is that there are actually two distinct types of Life Insurance policy you can purchase; Term life and Whole of Life.
Term Life Insurance
Term Life Insurance is actually the simpler form of Life Insurance Product in Hong Kong. Essentially, a Term Life Insurance plan will only provide coverage against your risk of death during a specific time frame, also known as the policy’s “term.”
The Term of a Term Life insurance plan can last 5, 10, 20, 30, or 35 years, with longer terms under the policy requiring a higher premium payment. However, in order to receive the benefit of such a policy (the settlement which is provided to your beneficiaries) your death must occur during the term of the policy. As such, should you die after the term has expired then your beneficiaries are not eligible to receive compensation under the policy, even if your death should occur a single day after the expiration of the plan’s term.
Whole of Life Insurance
The second type of life insurance plan available in Hong Kong is known as a “Whole Of Life” life insurance plan, and as the name suggests this type of plan will cover you for the entirety of your life, providing a settlement to your beneficiaries should you die.
Often more expensive than a Term Life insurance policy, a whole of life plan ensures that no matter when you die your family will have the support they need. Additionally, another big benefit of a Whole of Life insurance policy is the ability to “cash out” the plan and take back the policy’s cash value to use for planning your future finances.
There are a number of different insurance products available in Hong Kong, and depending on your situation certain plans may not be of use to you. With such a range of options, and a large number of insurance companies providing coverage, it can be confusing navigating the endless sea of choices.
The best advice in regards to Hong Kong insurance products is to shop around and take your time choosing the plan which is right for you. Ask plenty of questions and make sure you fully understand all the pros and cons of the policy you are considering purchasing.