Fire insurance, also known as building structure coverage, protects the physical structure of a property in Hong Kong from damage caused by fire, typhoons, and other accidents.Banks often require fire insurance as a condition for granting a mortgage.
What Does Fire Insurance Cover?
Unlike home insurance, which protects personal belongings such as furniture, clothing, electronics, and even money, fire insurance specifically covers the physical structure of your home. This includes the essential elements that make up the building.
Fire insurance typically covers damage or loss caused by:
- Fire and lightning – including accidental fires or lightning strikes.
- Natural hazards – such as typhoons, windstorms, and landslips.
- Other unforeseen events – depending on your policy, this could include pipe bursts or other structural accidents.
By focusing on the building itself, fire insurance ensures that the property can be repaired or rebuilt without a significant financial burden.
Who Is Responsible for Buying Fire Insurance?
(a) Statutory position in Hong Kong:
There is no legal requirement under the Building Management Ordinance (Cap. 344) (“BMO”) for owners, tenants, or management companies to purchase fire insurance for a building or unit.
The only mandatory insurance under the BMO is third-party risks insurance for common parts, which must be arranged by the Owners’ Corporation (OC) if one exists.
(b) Contractual position:
Property Management Company: The Deed of Mutual Covenant (DMC) may require the property management company to purchase fire insurance for the building’s structure or common parts. In such a case, the property management company must purchase the fire insurance for the building.
Owner: If a bank requires fire insurance as part of the mortgage, the property owner must ensure the building is properly insured.
Tenant: Tenants are not legally obliged to purchase fire insurance unless their lease requires it. Tenants may voluntarily purchase home insurance or contents insurance to cover personal belongings and liability.
Is Fire Insurance Mandatory?
For most homeowners, fire insurance is not mandatory unless it is required by a financial institution. Banks in Hong Kong usually require fire insurance when approving a mortgage, ensuring that the property serving as collateral is adequately protected. For those paying cash or without a mortgage, the decision to purchase fire insurance is optional but highly recommended.
Choosing Between Fire Insurance and Home Insurance: What is the difference?
Do homeowners need fire insurance after paying off my mortgage in Hong Kong?
Review your DMC or building management agreement for any ongoing fire insurance requirements. If it is a standalone property and there is no contractual obligation, you can choose whether to maintain fire insurance, however, without fire insurance, the owner bears the full financial risk of repairing/rebuilding after a fire.
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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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