By Felix Kong｜Licensed Insurance Agent
Looper Insurance Agency Limited (GA1034)
Published: 2026-08-31｜Last updated: 2026-08-31

Fire insurance covers the structure. Home insurance covers what is inside it and the liability you personally carry. The building's third party risks policy covers injuries in the common parts. Three policies, three separate jobs, and plenty of Hong Kong owners hold only the first one because the bank asked for it at drawdown. The gap shows up on the day of a fire, when the renovation, the furniture, the hotel bill and the neighbour's claim all sit outside the only policy in the drawer. This guide walks one fire through loss by loss, sets out what the law actually compels, and shows how to work out each sum insured.

Table of Contents

1. Three policies, three different jobs

2. After a fire: loss by loss

3. The building's policy: the law makes only half of it compulsory

4. Why the bank's fire policy is not the whole answer

5. Owner, landlord, tenant: who buys what

6. Working out the sum insured

7. FAQ

1. Three policies, three different jobs

Hong Kong building fire proposal forms usually describe the subject matter as cover "on the fabric of the building", and expressly carve out foundations and drains. In other words, a fire policy pays for the flat, not for what is inside the flat, and it does not answer for your legal liability to anyone else. Those two exposures belong to a home insurance policy.

2. After a fire: loss by loss

Take a fire in one flat of a multi-storey building. It spreads next door, the fire service installation in the common corridor is damaged, and a visitor is hurt while evacuating. Here is how the bill splits.

Eight lines of loss, three policies, and one line that may well be uninsured altogether. That is the price of treating one policy as if it were three.

3. The building's policy: the law makes only half of it compulsory

Of the three, only the building's policy is compulsory, and the statute compels less than most owners assume.

Under section 28 of the Building Management Ordinance (Cap. 344) and the Building Management (Third Party Risks Insurance) Regulation (Cap. 344B), every owners' corporation must procure and keep in force third party risks insurance in relation to the common parts of the building and the property of the OC, with a minimum insured amount of HKD 10,000,000 per event. The requirement took effect on 1 January 2011 and covers bodily injury to, or the death of, a third party in relation to common parts and facilities such as external walls, lifts, staircases and rooftops. If the OC fails to procure the cover, every member of the management committee commits an offence and is liable on conviction to a maximum fine of HKD 50,000, subject to a defence that the member exercised all due diligence to procure insurance. (Source: Home Affairs Department building management site; Community Legal Information Centre)

Two traps are worth naming. First, a "third party" includes owners, tenants, visitors and workers, but not employees the OC engages directly; an injured cleaner or guard is an Employees' Compensation matter under Cap. 282, not a master policy claim. Second, a public liability policy carrying a single HKD 10,000,000 limit for both bodily injury and property damage does not automatically satisfy the statute. As the Community Legal Information Centre puts it, if the policy does not prescribe that not less than HKD 10,000,000 is available first for third party bodily injury or death, the OC has to take out another policy or amend the existing one. The OC also files notice of the cover with the Land Registrar, which is how a prospective tenant or buyer can check whether a building is insured.

4. Why the bank's fire policy is not the whole answer

A bank requiring building fire insurance is enforcing a mortgage condition, not a statute, and you are not obliged to buy it from the lender. The policy protects the security, not your household.

1. The subject matter is the structure. Flooring you laid, joinery you commissioned and air conditioning you installed usually sit outside it.

2. There is no liability section. When the fire or the water reaches the neighbours and they claim against you, a building fire policy does not respond.

3. There is no alternative accommodation or loss of rent. Hotel bills and the rent you stop collecting have no corresponding benefit.

4. Extra perils have to be scheduled. The base perils of a standard fire policy are fire, lightning and explosion of boilers or gas used for domestic purposes. Typhoon, flood, earthquake and landslip are Extra Perils that operate only if listed in the schedule, and the non-fire portion usually carries its own excess.

5. Unoccupancy conditions bite. After a continuous vacancy beyond a stated period, commonly 30 days in the local market, the relevant cover can cease or fall into exclusion. Marketing a flat, or a long trip away, can trigger it.

6. Underinsurance is scaled. Policies carry an Average condition: where the sum insured falls short of the true reinstatement cost, the claim is reduced in proportion.

A building fire sum insured should track reinstatement cost, not the market value of the property and not the mortgage balance. Market value carries the land and the location premium, and neither of those burns. Reinstatement cost, by contrast, has to absorb debris removal, professional fees and any additional expense of complying with current building regulations. Insuring to market value means paying for cover you cannot use; insuring to the loan amount usually means buying too little.

5. Owner, landlord, tenant: who buys what

One line deserves separate treatment: declared use. Most home policies are underwritten on the footing that the flat is owner occupied. Letting it, subletting it or using part of it commercially is a material change in risk, and the policy normally requires you to notify the insurer in advance and obtain written agreement. Skip that step and, after a loss, the insurer has a ready argument about the basis of cover.

Note too that even where the OC has complied with Cap. 344, you still owe visitors inside your own flat the common duty of care under the Occupiers Liability Ordinance (Cap. 314). A contractor or friend who falls in your home is not a master policy claim.

6. Working out the sum insured

The structure figure starts from reinstatement cost: gross floor area multiplied by a rebuilding cost per square foot, plus debris removal, professional fees and the cost of complying with current building regulations. The rate per square foot varies with construction type, age and finishing standard, so a figure from a contractor or a surveyor beats a guess.

The contents figure comes from walking each room and asking what the item would cost new today, not what you paid for it. The list has to include fitting out and fixtures added after completion. Then check three things against it: the per item or per set sub-limit, the declaration threshold for valuables, and whether settlement is new for old or depreciated.

The personal liability limit is derived from the worst realistic outcome: how many flats a fire or an escape of water could reach, whether bodily injury is possible, whether defence costs sit inside the limit or are paid in addition, and whether the limit is expressed per occurrence or in the aggregate for the policy period.

When we review policies with owners, three findings recur: a sum insured that has not tracked rebuilding cost for years, fitting out never declared into the contents figure, and a let flat on a policy still written for owner occupation. None of that shows in the premium, only in the schedule and the wording.

FAQ

Q: The building already has a master policy. Do I still need fire and home insurance?

A: Yes. What section 28 of the Building Management Ordinance (Cap. 344) obliges an owners' corporation to buy is liability cover for third party bodily injury arising from the common parts and the property of the OC, at not less than HKD 10,000,000 per event. It is not cover for the structure of the whole building, nor for anything inside your flat. Your structure, fitting out, contents and personal liability still depend on a fire policy and a home policy.

Q: Can I just buy one policy instead of two?

A: It depends which one. A building fire policy generally covers the structure only, with proposal forms commonly excluding foundations and drains, and leaves out contents, fitting out, liability and alternative accommodation. Some home plans offer an optional buildings section, which lets structure and contents sit on one policy. If the flat is mortgaged, confirm with the bank that the arrangement is acceptable.

Q: I am a tenant. Does the landlord's policy cover my belongings?

A: Generally not. A landlord's policy protects the landlord's property and liability, and a tenant's furniture, appliances and personal effects fall outside it. Tenants should hold their own home insurance and watch the tenant's liability section, since tenancy agreements normally make the tenant answerable for damage to the premises.

Q: What happens if an owners' corporation does not buy the cover?

A: Where an OC has not procured third party risks insurance under section 28 of Cap. 344 and Cap. 344B, every member of the management committee commits an offence and is liable on conviction to a maximum fine of HKD 50,000, with a defence for a member who exercised all due diligence to procure insurance. Once a policy is effected, the OC gives notice of the insurer and the period of cover to the Land Registrar.

Q: Should the structure sum insured be market value or reinstatement cost?

A: Reinstatement cost. Market value includes the land and the location premium, and neither is lost in a fire. A sum insured below reinstatement cost triggers the Average condition and the claim is reduced in proportion; a sum insured above it simply costs more premium, since settlement is still capped at the actual loss. Review the figure after any major renovation and at each renewal.

Next step

The useful first move is not to raise a limit but to check three things: the sum insured and the extra perils on the fire schedule, whether the home policy has a personal liability section and an alternative accommodation benefit, and the period of the building's third party risks policy. Send us the documents and we will tell you which losses have nobody behind them.

Related Articles

• It Was Not Your Dog. You Can Still Be Liable: Occupiers' Liability for HK Restaurants

• From Subdivided Flat to Basic Housing Unit: Three Policies to Settle Before the Works Start

• Public Liability Insurance in Hong Kong: An English Guide for Businesses and Owners

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Looper Insurance Agency Limited (GA1034) offers a free policy check and quotations for fire, home and third party liability cover, comparing options across several insurers.
Tel: 2633 6813
Email: cs@looperin.com
Website: www.looperin.com

Disclaimer: This article is for reference only and does not constitute insurance or legal advice. Statutory requirements are summarised from the Building Management Ordinance (Cap. 344), the Building Management (Third Party Risks Insurance) Regulation (Cap. 344B) and public information published by the Home Affairs Department and the Land Registry; actual coverage is subject to policy terms and conditions. For legal advice, consult a solicitor.

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