[Home insurance] Examining its practical value through three common risks: Fire, flooding, and typhoons
Lifestyle2026-01-12
7 Mins Read
‘Is home insurance worth it?'
This is a question that has likely crossed the minds of many Hong Kong homeowners or tenants who have considered protecting their home. The monthly or annual premiums can feel like a silent, ongoing cost, while misfortunes such as fires or floods may feel distant. This mindset often leads us to underestimate the significance and value behind such coverage.
In reality, the value of insurance lies not in handling everyday issues, but in preparing for unexpected events. It focuses on managing low‑probability risks that could have a heavy impact if they occur. Let's take a concrete look through the lens of the three most common risks faced by Hong Kong households—fire, flooding, and typhoons—to break down how home insurance works and the practical value it provides in a crisis.
Risk one: Fire accidents – Coverage extends far beyond burned possessions
The causes of a domestic fire are numerous: ageing wiring, a forgotten stove left on, a short-circuiting phone charger, or even a dropped cigarette butt. Its defining characteristics—unpredictable and rapidly spreading—are enough to cause devastating damage.
The most direct loss is, of course, possessions that are burned in the aftermath. A comprehensive home insurance policy will cover furniture, fixtures and fittings, household appliances, and personal items within your home, helping you restore your quality of life.
However, the practical value of home insurance is often most evident in addressing the often overlooked secondary losses and expenses—which can be the heaviest financial burdens in the wake of a disaster:
1. Temporary accommodation cover: If a fire makes your flat uninhabitable, home insurance can cover the additional living expenses of temporary accommodation, so you and your family don’t have to worry about where to live.
2. Debris removal and clean-up costs: The site may be left with a significant amount of waste and debris. Home insurance can provide corresponding compensation for the costs of clearing debris, dismantling or demolishing.
3. Third-party legal liability: This is an extremely important yet frequently overlooked aspect. If the fire spreads and damages a neighbour's property, or causes bodily injury, you could face significant legal liability for compensation. The associated repair costs, medical fees, and legal expenses can be enormous. The ‘Third-Party Liability Coverage’ cover within a home insurance policy is designed specifically to transfer this substantial risk.
In summary: The value of home insurance lies in its ability to systematically manage the chain reaction that follows a disaster—from material loss and temporary relocation to potentially crippling legal claims. It turns what could be a devastating financial blow into a structured recovery process.
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Risk two: Water ingress and leaks – Who bears the losses and responsibility?
Water ingress and leaks represent another major threat to Hong Kong households, primarily falling into two main categories: external water ingress (e.g., typhoon or public drainage backflow) and the more common internal leaks, originating from burst pipes, loose clamps, or bathtub seepage in your own or an upstairs flat.
Water ingress or leaks can damage flooring, walls, furniture, and electrical appliances alike. Beyond damage to household contents, the critical issue lies in the involved third-party liability, which often becomes a flashpoint for neighbourly disputes.
Core value: Third-Party Liability Coverage
Imagine if a water pipe within your flat suddenly bursts. The torrent of water could not only flood your own home but also seep down through the floor below, damaging other residents' ceilings, renovations, and belongings. You could be held liable for repairing the damage to the affected flat, compensating neighbours for temporary accommodation, and covering potential legal expenses. This sum can often far exceed the cost of damage to your own possessions.
In such a scenario, the third-party liability within a home insurance policy acts as your safety net. If a burst pipe in your home causes flooding in another unit or damages the building's lift, or if a drainage issue leads to water ingress into a downstairs neighbour's ceiling, this coverage typically protects the policyholder. It assumes the compensation costs and legal expenses the owner may be liable for. This provides not only financial relief but also serves as a crucial buffer against litigation and strained neighbourly relationships.
Taking AXA's SmartHome Plus as an example, in the event of incidents like fire or a pipe burst event causing loss or damage to third-party property, AXA provides coverage of up to HKD20,000,000 for damages caused to third party. Referring to a past real case, rainwater accumulated on the roof of an insured flat due to insufficient drainage, entered the flat through a single-leaf aluminium-framed glass door, and subsequently flowed into one of the passenger lifts, damaging its components. AXA provided HKD161,000 in coverage for these third-party liability losses*.
Furthermore, AXA offers 24-hour support service via our Home Assistance Hotline for plumber, locksmith, or electrician referral.
In summary: The value of water ingress and leak coverage extends far beyond reimbursing damage to your own property. Its greater value lies in managing the complex financial and legal responsibilities when issues from your flat cause damage to others, while helping preserve good neighbourly relations.
Protect your home with SmartHome Plus
There is no place like home. Get your home the protection it deserves in just a few minutes, whether you own it or rent it.
Risk three: Typhoon damage – The threat outside your window
Typhoons are a seasonal challenge for Hong Kong, bringing direct and severe destruction: strong winds shattering windows, rooftop or balcony items damaged by weather, and rainwater flooding indoors.
Generally, home insurance covers damage to personal possessions caused by natural disasters like typhoons or rainstorms, as well as resulting internal damage. For example, it covers loss or damage to home contents if water enters due to drainage blockage during a typhoon or rainstorm.
Items placed on a balcony, windowsill, or rooftop (such as potted plants, clothes airers, or chairs and tables) can be blown away by strong winds and fall from height. Beyond losing the item itself, the more serious risk is injury to pedestrians or damage to vehicles below. In such cases, home insurance typically covers two aspects: first, the loss of the item itself (subject to policy terms); and second, third‑party liability coverage for injuries or damage caused by the falling object, helping to alleviate the policyholder's burden of legal and compensation costs. For instance, AXA's SmartHome Plus covers outdoor furniture, ornaments, statutes and other similar items that are usually located in the open, with a maximum annual compensation of HKD50,000 and a per-item limit of HKD5,000.
Previously, an AXA client experienced severe water leakage on their windowsill during a typhoon, which damaged several branded handbags placed there. The client subsequently made a claim, providing the brand guarantee cards for verification, and received over HKD300,000 in compensation*.
Typhoon and rainstorm loss cover: Before or during a typhoon, residents in low-lying areas may need to evacuate due to flooding and rent temporary accommodation. Generally, if a home becomes uninhabitable due to a No. 8 or higher tropical cyclone signal or black rainstorm warning, home insurance can provide compensation not only for related property damage but also for post-storm repair costs and temporary accommodation expenses. For example, AXA's SmartHome Plus provides compensation for up to five days, with up to HKD1,500 per day worth of accommodation reimbursement, if your home becomes uninhabitable due to a Black Rainstorm or a No. 8 (or above) Typhoon.
In summary: In the face of uncontrollable factors like typhoons, the value of insurance lies in providing financial support after the event and covering third-party liability risks arising indirectly from the storm. This allows you to navigate the aftermath of a natural disaster with greater peace of mind.
Further reading: [Home Insurance Tips] Another typhoon hits Hong Kong — does home insurance cover these 9 common situations?
Protect your home with SmartHome Plus
There is no place like home. Get your home the protection it deserves in just a few minutes, whether you own it or rent it.
Common myths about home insurance
You might have several common misconceptions about home insurance:
Myth 1: ‘I'm a tenant, so why would I need home insurance?’
Answer: Incidents such as aluminum window falls or household fires caused by short circuits occur from time to time. Whether you are a property owner or tenant, if an accident results from personal negligence—leading to injury to a third party or damage to property—you may be held legally liable. Therefore, tenants should also consider purchasing household insurance and third-party liability coverage.
Myth 2: ‘My building already includes insurance protection!’
Answer: The building's 'common areas insurance' or 'fire insurance' only covers the shared structure, lifts, lobbies, etc. Everything inside your flat—your renovations, possessions, and any liability arising from your personal negligence—is not covered.
Myth 3: ‘The claims process is so troublesome; it must be difficult to make a claim.’
Answer: The claims process actually has clear standards. The key lies in whether sufficient documents and proof can be provided after the incident occurs. You should document the damage immediately after an incident by taking photos or videos, and keep all receipts (e.g., for damaged items, emergency repair quotes, hotel invoices). With AXA, for example, you can manage claims easily through the Emma by AXA mobile app. For claims related to travel and overseas study insurance, or outpatient cover for domestic helpers and personal accidents, there's no need to fill out claim forms – submission is just a few taps away.
Myth 4: ‘What's the difference between fire insurance and home insurance? I already have fire insurance.’
Answer: Fire insurance primarily covers the structure of the building itself (e.g., walls, floors, ceilings). It's usually purchased by the property owner based on the property's redevelopment value. Home insurance, on the other hand, mainly covers renovations, furniture, and personal possessions inside the unit, as well as third-party liability and additional living expenses. It can be purchased by owners or tenants. The two types of coverage are completely different and not interchangeable. Property owners typically need both fire insurance (to cover the structure) and home insurance (to cover contents and liability).
Preparedness ensures peace of mind: Living with assurance
Through our analysis of the three major risks, it becomes clear that the true value of home insurance lies in addressing the cascading financial impact of those ‘low‑frequency, high‑severity’ events. It is not merely about covering property loss; it is about protecting your way of life from disruption and shielding you from substantial claims or unexpected expenses.
Here’s a simple self‑assessment checklist to evaluate the value of home insurance for you:
1. Financial resilience: A fire, serious water leak, or typhoon damage could instantly result in tens to hundreds of thousands in property losses. Having home insurance in place significantly reduces the out-of-pocket expenses you would otherwise face.
2. Liability risk consideration: If you value good relations with your neighbours and want a proper financial solution in place should an incident from your home affect others —helping you avoid disputes and legal proceedings—you should consider household insurance.
3. Risk management planning: Your home is one of your most important assets. It deserves the added security of a comprehensive risk management plan, with insurance providing a solid safety net.
Ultimately, the value of home insurance lies in empowering you with choice and the ability to recover calmly after an unexpected event. It represents responsible planning for your household's financial stability. We recommend that, based on your asset value, living environment, and risk tolerance, you carefully review the detailed terms of different products to make the most informed arrangement for yourself and your family.
Protect your home with SmartHome Plus
There is no place like home. Get your home the protection it deserves in just a few minutes, whether you own it or rent it.
Product Features of AXA's SmartHome Plus
- Tailored Coverage – SmartHome Plus offers customized coverage that can be adapted to your specific needs as owner, tenant, occupier and landlord.
- Worldwide Protection – from cash, unauthorized use of credit cards, to your treasured jewellery within your home. If you effect the optional rider, you can even safely bring your personal items abroad.
- Typhoon & Rainstorm Coverage – we reimburse your temporary accommodations and outside meals expenses when your home becomes uninhabitable due to a Black Rainstorm or a No. 8 (or above) Typhoon.
- Third-Party Liability Coverage – we cover up to HKD20,000,000 for damages caused to third party – such as from a fire or a pipe burst event.
- Loss of Rent Cover – our home insurance covers your loss of rent when the home contents of your leased-out property has been damaged accidentally.
- Emergency Support – enjoy 24-hour support service via our Home Assistance Hotline for plumber, locksmith, or electrician referral.
*The example case is for reference only. The actual compensation payable will be determined based on individual circumstances and may differ from the amounts stated in the above example.
Insurance plans vary in coverage and are subject to their respective terms and conditions. For detailed terms and conditions of the plan, please refer to the relevant product brochure and policy contract.
No warranty or responsibility is assumed by AXA Hong Kong and our related or holding companies regarding non-infringement, security, accuracy, completeness, adequacy, reasonableness, fitness for a purpose or free from computer viruses in connection with the information and materials provided. AXA Hong Kong and our related companies and holding companies do not accept any liability for any loss, damage, cost or other expense, whether wholly or partially, directly or indirectly, arising from any error, inaccuracy or omission of the information and materials to the extent that such liability is not excluded by law.
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