With enhanced living standards, the cost of private properties such as houses and apartments, vehicles, and appliances keep increasing and these items have become important assets of the people. As pet and housekeeping services gain popularity, disputes and risks arising from accidental injuries by pets and domestic helpers are on the rise. Beyond the safety of their properties and accident events, more people are at the same time starting to consider risk control methods for property safety and personal injuries of the others outside their families.
Home Insurance is a common product for individuals and families. This kind of policies reimburse the residents or the families for property loss with timely financial compensation that can help the residents to enjoy a stable life and hence protect social stability.
What are the risks related to household properties?
- Flowerpots on the balcony may fall and injure other people.
- The external air-conditioning units may fall and suffer damage which could also destroy the weather sheds of neighbours in lower levels or the garden in the patio or light well of the residents on the ground floor.
- In Winter, waterpipes may crack and burst causing water damage to interior decoration.
- Waterpipes may burst, that cause floods for neighbours at lower levels and damage to their flooring and furniture.
- Careless use of electric appliances may cause fire due to short circuits and damage to interior decorations, appliances and clothes.
- Loss of valuable items due to burglary.
- Damage to appliances like television sets due to negligence of domestic workers in their service process.
- Bodily injuries due to accidents during service process of domestic workers.
- Pet dogs may bite passers and cause injuries and damage to their clothing.
Most of these risks can be compensated with the purchase of Home Insurance. However, what are the covers in this type of insurance?
Popular Home Insurance policies cover the properties own, use, keep by the individuals or families that are located inside the house at the listed address including:
- House. For example, if your house costs CNY 2 million, your Home Insurance policy’s limit should be close to 2 million.
- Interior decorations and ancillary facilities. If your home comes with fine decorations, your policy limit should be chosen according to the expenditure on that decoration work at the time, e.g. a coverage of CNY 200k or 400k.
- Common home appliances such as water heaters, refrigerators, air-conditioners, sofas. It is recommended to set a policy limit that reflects the prices of these appliances.
- Cash, jewelry, artefacts and handicraft collectibles, etc. are generally not covered by these policies. To get these items insured, they must be assessed for their value and arranged through special agreements with insurers.
- Homeowner’s liability is usually an add-on coverage to death, bodily injury and direct loss of property of a third party resulted from the homeowner’s fault or negligence.
- Employer’s properties mean the loss of household properties resulting from the fault or negligence of domestic workers in their service process.
- Domestic employment liability means bodily injuries to domestic workers resulting from accidents in their service process.
- Pet liability means bodily injuries to a third party caused by pets.
It is worth noting that houses, decorations and properties, etc. are among the standard coverage provided by insurers. However, the coverage of Homeowner’s liability, pet liability, cash and collectibles, etc. can differ between insurers.
Who can buy Home Insurance?
- House or apartment registered under your name. It is your house or apartment, or you have ownership of the house that you need to insure the house, its decoration, indoor facilities and properties.
- For rentals, you have the right to use the house or apartment upon the signing of the tenancy agreement.
You normally do not need to insure the construction of the house or apartment. Some insurers even offer products specifically to tenants.
Exclusions
- Properties which their actual value cannot be determined e.g. marketable securities, stamps, documents, account books, charts and diagrams, technical data cannot become subjects of insurance.
- Necessities and consumer products, e.g., food, groceries, cigarettes and spirits, drugs, cosmetic products. These are for daily consumption and cannot become subjects of insurance.
- Motorcycles, bicycles, motor vehicles, etc. There are specialized insurance products to cover them, and these items are not covered under Home Insurance.
- Items that their collection, preservation or ownership are forbidden under the law e.g. guns, ammunitions, explosives, narcotics.
- Illegal structures and constructions, dilapidated houses
- Risks related to earthquakes, tsunamis, etc.
The insured amount of a Home Insurance policy is set by the Insured according to their own estimation of the insured properties. If the estimated value is too low, the coverage will be inadequate. If it is too high, the premium will become higher. On the other hand, the insurer will pay a maximum amount that equals the actual value of the insured properties according to the compensation principles in the event of disasters. So that the Insured cannot profit from this compensation.
Therefore, it is advisable to have conduct objective, reasonable estimation and set a policy limit that matches the value of the insured property. This can offer adequate coverage to these properties with a reasonable premium without under- or over-estimating their values.
For the policy limit of Homeowner’s Liability Insurance (e.g. homeowner’s liability, domestic employment liability, pet liability), it is recommended to set a higher value such as CNY 300k. Since the value of personal property is becoming higher nowadays, the requested compensation could often be higher especially when dealing with property damage, bodily injuries and medical expenses of third parties. However, it could only impact the overall premium slightly with increased liability limit.
If you want more information, please contact our expert team or check out the recommended products on our page here.
