Fire Insurance in Hong Kong: Definition, Coverage and How to Choose

When purchasing a property, fire insurance is something every buyer will encounter. Many assume it only covers  damage caused by fire and is required solely to meet bank/mortgagee requirements. In reality, fire insurance offers much broader protection. This guide explains what it covers, how to calculate the sum insured and premiums, and how it compares with home insurance—plus why the two often work best together. 

What Is Fire Insurance? 

Fire insurance, also known as building structure insurance, goes beyond  damage by fire. It covers structural loss or damage caused by events such as typhoons, heavy rain, landslides, fires, and explosions. Typical coverage includes original fixtures like ceilings, floors, walls, doors, windows, and pipes. 

Why Fire Insurance Matters 

Meeting Mortgage Requirements 

For banks, a property serves as collateral for the loan. To safeguard this asset, banks usually require borrowers to hold fire insurance until the mortgage is fully repaid. If major structural damage occurs, the payout reduces the bank’s credit risk. 

Protecting Your Most Valuable Asset 

For homeowners, a property is often the single largest investment. Fire insurance ensures that if disaster strikes, you have the financial means to repair or rebuild, avoiding crippling out-of-pocket costs. 

How Fire Insurance Premiums and Sums Insured Are Calculated 

When purchasing fire insurance, the sum insured is typically determined in one of three ways: 

• Original Mortgage Loan Amount 
  Based on the full initial loan, including add-ons such as car park or top-up loans. 
• Property Rebuilding Cost 
  Based on the actual cost of rebuilding the property. Renewals usually require a valuation, sometimes involving surveyor fees. This method most accurately reflects real protection needs. 
• Outstanding Mortgage Balance 
  Based on the current unpaid loan balance. While this lowers premiums, it may leave you underinsured if rebuilding costs exceed the balance. 

Because different banks may adopt different requirements, it is advisable that you seek advice from bank for more accurate requirements. 

How Companies Charge Fire Insurance Premiums 

Once the sum insured is set, banks or insurers apply a premium rate and may offer discounts. 

Formula: 
Fire Insurance Premium = Sum Insured × Premium Rate – Discount 

Example 

Consider a property with a market value of HK$8,000,000, a rebuilding cost of HK$4,000,000, and an outstanding loan balance of HK$2,000,000: 

• Original Loan Amount → Sum insured HK$6,000,000 → higher premium. 
• Rebuilding Cost → Sum insured HK$4,000,000 → adequate coverage with a reasonable premium. 
• Outstanding Balance → Sum insured HK$2,000,000 → lowest premium, but may be insufficient if full rebuilding is needed. 

Fire Insurance vs. Home Insurance 

In short: fire insurance protects the building structure, while home insurance protects your Contents/belongings inside.  On top, it will also cover for Public Liability.  For more details, see: Home Insurance and Fire Insurance: A Buying Guide. 

How to Choose Between Fire Insurance and Home Insurance 

Homeowners (With Mortgage) 

It’s best to have both fire and home insurance for full protection. 

• Fire insurance: covers the building structure and meets mortgage requirements. 
• Home insurance: covers furniture, appliances, and personal belongings, etc. And Public Liability. 

Homeowners (Mortgage Paid Off / Rental Property) 

Even without bank requirements, Building structure protection insurance is strongly recommended to safeguard your property. If renting out a furnished unit that comes with appliances and furniture, consider adding home content insurance with optional Building structure benefit for a more comprehensive coverage.

H3： Tenants 

Tenants aren’t responsible for building structure insurance (the landlord covers the structure). However, home insurance is essential to protect: 

• Personal belongings (e.g., laptops, electronics, clothing) 
• Public Liability liability (e.g., water leaks damaging neighbors’ property) 

Why Insure with Generali? 

Generali Hong Kong offers comprehensive fire and home insurance solutions, giving you peace of mind with protection you can rely on. 

Fire Insurance 

Generali Hong Kong’s Fire Insurance cover buildings up to 50 years for losses or damages caused by fire, by lightning,  and by explosion of boilers or gas used for domestic purposes. It also extends protection against incidents, including flood, typhoon, windstorm, landslip and subsidence, riot and strike, malicious damage, bush fire, water tanks overflow, burst of pipes, and sprinkler leakage¹.  Generali Hong Kong’s fire insurance is approved by all banks and lending facilities.  It alsoprovides instant online quotes and policy issurance.  Once issued, Generali Hong Kong can help courier all original policy documents and premium receipt to bank, eliminating the need for you to submit the documents in person and a hassle free experience.   

Home Package Insurance   

Generali Hong Kong’s Home Package Insurance covers for accidental physical loss of or damage to Contents with coverage up to HK$1,000,000. Additionally, the comprehensive home insurance includes public liability, personal accident, and optional building coverage, with public liability coverage of up to HK$7,500,000.  Annual premium starts at just HK$688 (as low as HK$2 per day *), and you can conveniently purchase the policy online, ensuring a secure and comfortable home with ease.  

* Based on an annual premium of HK$688/365 days = HK$1.9/day (applicable to properties with a gross floor area of 500 sq. ft. or less or buildings aged under 40 years).   

Frequently Asked Questions 

1. After purchasing a property or clearing your mortgage, is fire insurance still necessary? 

Yes. Even if the bank no longer requires it once your mortgage is fully repaid, fire insurance is still strongly recommended. Your property is a valuable asset, and fire insurance provides financial protection if structural damage occurs due to fire, natural disasters, or other covered risks. 

2. When a building is covered by fire insurance, must unit owners buy separate coverage? 

If the building already has a master fire insurance policy arranged (for example, through the owners’ corporation or management office), individual unit owners generally do not need to purchase separate fire insurance. However, it is still advisable to consider home insurance to protect personal belongings, fixtures, and liability within the unit.