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What insurance do a need for a mortgage from the bank?
In order to successfully obtain any mortgage on a home in Hong Kong, most Hong Kong banks will require that the mortgagee takes out comprehensive fire insurance coverage on the property.
Fire insurance is one of two types of Home Insurance policy available in Hong Kong. The other type being Home Contents Insurance. However, in the case of a mortgage the bank will be more interested in recouping their investment should something happen to the property under mortgage.
Hong Kong Fire Insurance will cover the rebuilding costs of your property in the event of a covered loss. As the name implies, a covered loss will include Fire. But it is important to note that Fire Insurance can include extended coverage against losses from “Allied Perils.”
Allied Perils, or Property All Risks cover, in this case would refer to any accidental physical loss or damage to the property following Flooding, Typhoons, Landslip, and Subsidence. It is important to note that the premium associated with a Fire Insurance and Allied Perils home insurance content is significantly more expensive than a policy which only covers a defined risk, i.e. Fire.
In terms of the premium you will expect to pay, this will be calculated based on a number of factors starting with the actual rebuilding value of the property, but will also include your property’s location, what the property is being used for, and whether any security exists to protect the property. As such, the more expensive a home you are buying the more expensive the premium you can expect to pay even if you are only buying a policy covering against a single peril.
It is routine for all banks in Hong Kong to request Fire Insurance be provided prior to the completion of a mortgage. This is extremely logical due to the average cost of a home in Hong Kong, the bank wants to ensure that even in the event of a catastrophic loss the mortgage will not be written off as a total loss.
If you have any more questions about Mortgage Insurance in Hong Kong, or if you want to know about any other types of insurance in Hong Kong just ASK CCW! Remember, we’re simplifying your insurance!
Answered on: 26 April, 2019 17:00
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