This is a common question among homeowners in Hong Kong, especially in high-rise buildings where the Owners’ Corporation (OC) or property management company already arranges a master fire insurance policy. Below is a detailed breakdown of the legal position, contractual obligations, risk exposures, and practical recommendations.
Statutory Position: No Legal Requirement for Unit-Level Fire Insurance
Hong Kong law does not require individual unit owners to purchase fire insurance for their flats.
Under the Building Management Ordinance (Cap. 344), the only mandatory insurance is third-party risks insurance for the common parts of the building.
This statutory requirement is separate from fire insurance and ensures compensation for injuries or damage caused by common areas and not structural fire loss. As a result, whether to insure an individual unit is largely a contractual and personal risk-management decision.
What does Fire Insurance Usually Cover
A fire insurance policy typically covers the structural fabric of the entire building, including:
- External walls
- Floors and ceilings
- Roof areas
- Staircases and lifts
- Lobbies and other common parts
Some policies also extend coverage to the basic structural shell of individual units, but interior features are rarely included. Most building policies exclude Interior fixtures and fittings, renovation works, built-in furniture and personal belongings and appliances.
Contractual Obligations Under the DMC or Other Agreements
Whether additional fire insurance is required depends on the building’s Deed of Mutual Covenant (DMC):
- Many DMCs require the OC to insure the entire building’s structure, funded by owners through management fees.
- DMCs rarely require individual unit owners to take out separate fire insurance.
- A bank mortgage, however, may impose its own requirement on the owner to secure adequate fire insurance for the unit.
- A lease agreement may oblige tenants to insure contents or liability, but not the building structure itself.
Unless the DMC or a mortgage agreement specifically requires otherwise, unit-level fire insurance is optional.
Risk Exposure When Relying Only on the Building Policy
Even if the fire insurance policy covers the building structure, unit owners face significant uninsured risks if they do not have their own personal policy. These include:
- Interior Renovations and Upgrades
Any improvements such as wooden flooring, kitchen upgrades, built-in wardrobes, expensive bathroom fittings are typically not covered by the building policy. Owners would need to pay fully out of pocket to restore them after fire or water damage.
- Personal Belongings and Furniture
Building-level insurance does not cover electronics, furniture, clothes, valuables, artwork, appliances. These fall under home insurance, which must be purchased separately.
- Loss of Use / Alternative Accommodation
If the home becomes uninhabitable after a fire, the policy usually does not pay for: Temporary accommodation, Loss of rental income (for landlords), Relocation costs. This type of cover is only available under a standalone home or contents insurance policy.
So, When Should Owners Buy Their Own Policy?
If the building’s master fire policy only protects the structure and common parts (which is standard in Hong Kong), a unit owner will still face liability for Interior damage, damaged fittings and renovations, loss of contents, temporary accommodation
A separate home insurance policy fills these gaps and ensures the owner is fully protected.
Conclusion: Is Separate Fire Insurance Necessary?
From a legal perspective, no. Owners are not required to purchase their own fire insurance if the building already has coverage.
From a practical and financial perspective, yes. Most building policies leave major gaps that can expose owners to large personal losses.
A personal home insurance policy is strongly recommended if you want comprehensive protection for your unit’s interior, fittings, and belongings.
Recommended Action Plan for Homeowners by Ask.Legal
- Request a copy of the building’s fire insurance policy from the property management company
- Review its coverage, exclusions, and the parts of the unit it insures.
- Identify areas where you may be exposed to out-of-pocket loss.
Disclaimer: The above content is for reference only and does not constitute legal advice. If you need professional help, Ask.Legal can match you with qualified Hong Kong family lawyers.
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