By Felix Kong｜Licensed Insurance Agent
Looper Insurance Agency Limited (GA1034)
Published: 2026-08-31｜Last updated: 2026-08-31
The agenda item reads "major repair works budget," a seven figure number goes up on the projector, the vote passes, and nobody asks which policy answers if something goes wrong. Most corporations hold one piece of paper everyone calls "the building insurance." A building going into major repairs needs four: the statutory Third Party Risks Insurance required by section 28 of the Building Management Ordinance (Cap. 344), the contractor's Contractors' All Risks (CAR), Employees' Compensation (EC) under Cap. 282, and cover for the committee members personally. Four policies, bought by different parties, protecting different people, running on different dates.
Table of Contents
The statutory policy covers one thing only
Four policies, four jobs
Contractors' All Risks: dates and names, not limits
Employees' Compensation: a floor of HKD 100 million
Committee members: protected, not immune
A five point checklist before the AGM
FAQ
1. The statutory policy covers one thing only
Section 28 of the Building Management Ordinance (Cap. 344) requires an owners' corporation to procure and keep in force third party risks insurance for the common parts of the building and the property of the corporation. The Building Management (Third Party Risks Insurance) Regulation (Cap. 344B) took effect on 1 January 2011 and sets the minimum insured amount at HKD 10,000,000 per event.
What the Regulation requires the policy to cover is the corporation's legal liability for bodily injury to, or the death of, a third party in relation to the common parts and the corporation's property. Property damage is not a statutory requirement. A policy that meets the law exactly can pay nothing for a third party's damaged property, while the corporation's liability for that damage remains, with no policy behind it.
Who counts as a third party is worth reading carefully. Owners, tenants, occupiers, property management staff and trespassers injured in the common parts are all third parties under the policy. Technicians and watchmen employed directly by the corporation are its own employees and fall outside it.
The Regulation also strikes out six restrictions that have no effect even if an insurer writes them into the policy: the number of claims during the policy period, the age of the building, its condition or state of maintenance, the number of flats, the use of the building or any part of it, and the existence of a statutory instrument in relation to the building. The insurer still has to pay the third party.
Having paid, the insurer can then claim against the corporation. That sentence deserves a second reading at committee level. The statutory policy protects the injured member of the public, not the corporation. Treating it as "the law makes the insurer pay anyway" turns it into a contingent liability in the corporation's own accounts.
2. Four policies, four jobs
Policy | Who it protects | Who normally buys it | The question to ask before the meeting |
|---|---|---|---|
Third Party Risks Insurance (statutory) | Third parties injured in the common parts | The corporation | Does the period run past completion? Was the insurer notified of the works in writing? |
Contractors' All Risks (CAR) | The works, plus third party injury and property damage caused by them | The contractor | Is the corporation named on the policy? Does the sum insured match the contract sum? |
Employees' Compensation (EC) | Contractors' and sub-contractors' workers, plus the corporation's own staff | Contractor and corporation separately | Does it reach every tier of sub-contractor? Do the corporation's staff have their own policy? |
Management committee liability | Committee members personally, for defence costs and damages | Arranged by the corporation | Claims made basis? Are retired members still covered? |
The difference between these four is not the limit but who each one protects. One falling object from the scaffolding can trigger three at once, and can fall between all three if a date, a named insured or a disclosure was missed.
3. Contractors' All Risks: dates and names, not limits
CAR has two sections. Section I covers the works, the materials and the completed parts. Section II covers third party injury and property damage arising from them. The corporation does not buy this policy but has the most to lose, so ask for a copy before signing rather than accepting a line on the quotation, then check five things.
Period of insurance. From possession of site through to completion, including the Defects Liability Period (DLP).
Sum insured. Section I normally tracks the contract sum, so added scope needs an endorsement.
Named insureds. A Principal Clause puts the corporation on the policy, and a Sub-contractor of every tier clause picks up the whole chain.
Surrounding property. Neighbouring flats, shop signage and parked cars, which the surrounding property and existing structures wording covers.
Excess and exclusions. What is deducted per event, and what conditions apply to work at height, lifting or scaffolding.
The gap between the policy expiry date and the date the works actually finish is the most common hole we see. The programme slips, the policy lapses, and the contractor does not always think to extend it. The day something happens, the corporation as building owner is pulled into the claim. Checking the certificate once before work starts is not enough.
4. Employees' Compensation: a floor of HKD 100 million
Section 40 of the Employees' Compensation Ordinance (Cap. 282) requires every employer to hold employees' compensation insurance, at the minimum amounts below.
Number of employees | Minimum insured amount per event |
|---|---|
Not more than 200 | Not less than HKD 100,000,000 |
More than 200 | Not less than HKD 200,000,000 |
An employer without cover commits an offence carrying a maximum fine of HKD 100,000 and two years' imprisonment on conviction. The Labour Department also states plainly that the statutory minimum does not represent the ceiling of an employer's legal liability.
The sub-contracting chain is dealt with in section 24. Where a sub-contractor's employee is injured at work, the principal contractor is liable to pay the compensation due under the Ordinance and may then recover it from the sub-contractor. The Labour Department adds that a principal contractor undertaking construction work may take out a single policy with a per-event insured amount of not less than HKD 200,000,000 covering both its own and its sub-contractors' liabilities. So do not sign five small contracts with five trades and assume each is insured. Contract with one principal contractor and require the EC policy to be extended in writing to every tier.
The half that gets forgotten is closer to home. Watchmen, cleaners and technicians engaged directly by the corporation are its employees, outside the third party policy, so the corporation as employer needs its own current EC policy. Work injuries must be reported to the Commissioner for Labour within 14 days and fatalities within 7 days.
5. Committee members: protected, not immune
Section 29A protects participants of a management committee. A participant who acts in good faith and in a reasonable manner, in exercising a power conferred on the corporation or performing a duty imposed on it, is not personally liable. The Building Management (Amendment) Ordinance 2024 extended that to non-member secretaries and treasurers.
Protection is not immunity. Nothing in the Ordinance stops a person suing a committee participant. Section 29A gives the participant a statutory basis on which to strike out the proceedings or defend the claim, and defending a claim costs money. Three exposures are worth naming:
No statutory third party policy. Every member of the management committee is liable on conviction to a maximum fine of HKD 50,000, with a defence for a member who can show all due diligence was exercised to procure it.
Failure to keep required documents. The amendment ordinance in force since 13 July 2025 created new criminal sanctions for failing to keep invoices and receipts, procurement documents and certified minutes, carrying a fine at level 4 (HKD 25,000) on conviction, again with a due diligence defence.
A non-compliant procurement contract. A person who enters into a procurement contract that does not meet the essential statutory requirements may be personally liable for claims arising from that contract.
The market answer is management committee or office bearers liability cover, frequently written on a claims made basis, responding to claims first made during the policy period. Committees rotate and construction claims surface years later, so two questions belong in the quotation: whether retired members stay covered, and what run off applies if the policy lapses.
6. A five point checklist before the AGM
Classify the procurement. Since 13 July 2025 the amended ordinance defines three categories: type 1 (value over HKD 200,000), type 2 (over 20 per cent of the average annual expenditure for the last three financial years), and large-scale maintenance procurement (common parts works averaging over HKD 30,000 per flat, disregarding car parking spaces).
Tendering and resolution thresholds. Above HKD 200,000 the tender must go to at least 5 potential suppliers, and from HKD 10,000 to HKD 200,000 to at least 3. Late tenders must not be accepted. Type 2 and large-scale maintenance procurements need a general meeting resolution to accept a tender; large-scale maintenance also needs at least 5 per cent of owners or 100 owners, whichever is the lesser, voting in person, and cannot waive tendering.
Declarations and retention. Committee participants and the responsible person must declare any interest in a tender, the notice must go up prominently within 7 days and stay up 7 consecutive days, and procurement documents and certified minutes must be kept six years.
Put the insurance into the tender. A condition requiring the successful bidder to hand over CAR and EC policy copies before signing, with the corporation named, every tier of sub-contractor covered, and the period running through the maintenance period, beats chasing certificates afterwards.
Display and notify. Display the notice of insurance with the particulars of the policy prominently in the building (Cap. 344B, section 5(3)), and notify the Land Registry under section 28(6A) when the insurer or the period changes.
Three things come up again and again when we review policies for corporations: the third party policy period does not line up with the works programme, the corporation's name is nowhere on the contractor's CAR, and its own staff have no separate EC policy. None of that shows on a quotation. You have to open the schedule. On limits, the statutory HKD 10,000,000 is a floor rather than an answer, and whether the limit reads "any one occurrence" or "in the aggregate" is the question nobody asks and the one that decides a large claim.
FAQ
Q: Must an owners' corporation buy third party risks insurance, and for how much?
A: Yes. Section 28 of the Building Management Ordinance (Cap. 344) requires the corporation to procure and keep in force third party risks insurance for the common parts and its own property, and the Building Management (Third Party Risks Insurance) Regulation (Cap. 344B), in force since 1 January 2011, sets the minimum at HKD 10,000,000 per event. If it fails, every member of the management committee is liable on conviction to a maximum fine of HKD 50,000.
Q: Does the statutory policy cover a third party's property damage?
A: The law only requires cover for liability for bodily injury to or death of a third party. Property damage is not a statutory requirement. If the corporation wants a third party's property damage covered as well, that has to be arranged separately with the insurer rather than assumed to sit inside the statutory policy.
Q: The contractor buys the CAR policy, so is there anything left for the corporation to do?
A: Yes. CAR and EC are normally taken out by the contractor, but the corporation should obtain copies and confirm four points: the period covers the full programme including the maintenance period, the sum insured matches the contract sum, the corporation is named under a Principal Clause, and every tier of sub-contractor is covered.
Q: A watchman employed by the corporation is injured in the lobby. Which policy responds?
A: The corporation's own employees' compensation policy. Technicians and watchmen engaged directly by the corporation are its employees and fall outside the third party policy. Under section 40 of the Employees' Compensation Ordinance (Cap. 282), the minimum insured amount per event is HKD 100,000,000 for an employer with not more than 200 employees and HKD 200,000,000 above that.
Q: Can a committee member be sued personally for approving the works?
A: Section 29A provides that a committee participant who acts in good faith and in a reasonable manner, in exercising the corporation's powers or performing its duties, is not personally liable, and the 2024 amendment extended that to non-member secretaries and treasurers. It does not stop anyone bringing proceedings; it gives the member a statutory basis to defend them, and defending a claim costs money.
Next step
Looper Insurance Agency Limited (GA1034) is a licensed insurance agency and can compare these classes across several insurers. Before a repair programme starts, the useful move is not to raise a limit. It is to open each policy and check the dates, the named insureds and the limit basis. Send us the policies, schedules and works contract and we will go through them before the AGM.
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Free Quote
Looper Insurance Agency Limited (GA1034) offers a free policy check and quotations for owners' corporation third party risks insurance, employees' compensation and contractors' all risks.
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 Cap. 344, Cap. 344B and Cap. 282 with Home Affairs Department and Labour Department publications. Actual coverage is subject to policy terms and conditions. For legal advice, consult a solicitor.
免責聲明：本文僅供參考，不構成保險或法律建議。條例內容以《建築物管理條例》（第 344 章）、《建築物管理（第三者風險保險）規例》（第 344B 章）及《僱員補償條例》（第 282 章）最新公布為準，實際保障範圍以保單條款為準。
Conclusion
One statutory certificate does not mean full cover. It pays third party injury and death only, never property damage, and a contractor's policy left to lapse before the works finish leaves the corporation exposed with no cover in place. What protects the corporation before the AGM votes is matching every policy's dates and named insureds to the real works programme. Talk to us about checking the schedules before the budget goes to a vote.
Felix Kong
CEO
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