By Felix Kong｜Licensed Insurance Agent
Looper Insurance Agency Limited (GA1034)
Published: 2026-08-31｜Last updated: 2026-08-31
The sentence you hear at almost every owners' corporation renewal meeting is: "We bought what the law requires." That answers only half the question. The third party risks insurance required by section 28 of the Building Management Ordinance (Cap. 344) is drawn far more narrowly than most committees assume, narrow enough that three of the most expensive things that can happen to a building fall outside it.
Table of Contents
What the law actually requires
Gap one: the building's own property
Gap two: the OC's own employees
Gap three: decisions of the management committee
Insured and still exposed
Three renewal mistakes
FAQ
1. What the law actually requires
Section 28(1) requires a corporation to procure and keep in force, for the common parts of the building and the property of the corporation, a policy of third party risks insurance complying with the requirements prescribed for that section. Those sit in the Building Management (Third Party Risks Insurance) Regulation (Cap. 344B), in force since 1 January 2011.
The required cover is narrow: liabilities in respect of bodily injury to or the death of a third party. Not property. Not repairs. Injury and death.
Under section 28 of the Building Management Ordinance (Cap. 344) and the Building Management (Third Party Risks Insurance) Regulation (Cap. 344B), every Hong Kong owners' corporation must procure and keep in force third party risks insurance for the common parts of the building and the property of the corporation. The minimum insured amount is HKD 10,000,000 per event, and the required scope is confined to bodily injury to or death of a third party. Where an OC fails to comply, every person accountable for the contravention commits an offence and is liable on conviction to a maximum fine of HKD 50,000.
Two conditions attach that committees treat as paperwork: the policy must be in the name of the OC, and the information given to the insurer must be accurate, since inaccurate information can render the policy invalid. Note also how widely "third party" reads. The government legal information service lists owners, tenants, occupiers, visitors, management company staff and trespassers; direct employees of the OC are not third parties.
2. Gap one: the building's own property
The Home Affairs Department groups private building insurance into three types. Side by side, the first gap is obvious.
Type of cover | Compulsory? | What it does |
|---|---|---|
Public liability (third party risks insurance) | Yes, section 28 of Cap. 344 | Indemnifies compensation and legal costs payable to a third party for bodily injury or death caused by negligent building management |
Employees' compensation, commonly called labour insurance | Yes, Cap. 282 | Compensates employees engaged in building management work who are injured or killed in the course of employment |
Common property insurance (property damage cover) | No | Indemnifies loss of or damage to the building's common property from fire and other insured perils, including windstorm, flood and malicious damage |
The third row is the blind spot. A flooded lift, a burst rooftop tank, a fire in the meter room: that is damage to the building's own property, with no third party involved. A liability policy answers "what do you owe someone else", not "what of yours is broken".
A common misconception runs like this: "Our policy covers third party property damage too, so we are better protected than the law requires." The government legal information service is blunt about it. A public liability policy with a HKD 10,000,000 limit covering both bodily injury and third party property damage does not necessarily satisfy the statutory requirement. Unless the policy provides that not less than HKD 10,000,000 is available first for bodily injury or death, the OC must amend it or take out another. An extra head of cover is not extra limit.
3. Gap two: the OC's own employees
Guards and cleaners employed by the property management company are third parties as far as the OC is concerned, because their employer is the management company. Reverse the payroll and the answer reverses: a watchman or cleaner engaged directly by the OC is an employee, not a third party, and the statutory policy does not respond when that person is hurt.
Arrangement | Who is the employer | What the OC needs |
|---|---|---|
Building outsourced, guards and cleaners employed by the management company | The management company | A copy of the management company's valid employees' compensation policy, checked for period, trades and headcount |
OC engages watchmen, cleaners or clerical staff directly, including part-timers and relief shifts | The OC | An employees' compensation policy in the OC's own name |
OC engages a contractor directly for minor works | The contractor | Copies of the contractor's employees' compensation and Contractors' All Risks cover, checked for period and named insured |
Under section 40 of the Employees' Compensation Ordinance (Cap. 282), all employers, including contractors and sub-contractors, must insure their liabilities under the Ordinance and at common law, irrespective of the length of the employment contract, the hours worked, or whether the job is full time, part time, permanent or temporary. Failure to do so is an offence carrying a maximum fine of HKD 100,000 and two years' imprisonment.
4. Gap three: decisions of the management committee
The statutory policy covers bodily injury and death. A wrongly awarded maintenance tender, a procurement step skipped, a disputed set of accounts: none produces a personal injury, so the third party policy never engages.
Section 29A of the Building Management Ordinance provides a layer of protection. Members of the management committee are not personally liable for acts done in good faith and in a reasonable manner, and the Building Management (Amendment) Ordinance 2024, in force since 13 July 2025, extends that protection to secretaries and treasurers who are not committee members.
The protection is conditional: good faith and reasonableness have to be established in a dispute, which costs money and time. The same amendment also tightened the regime, creating criminal sanctions for failing to keep specified documents, among them accounting receipts, procurement documents and certified minutes. On conviction, participants of the management committee and building management agents are liable to a fine at level 4, that is HKD 25,000. A statutory defence is available to a person who exercised all due diligence.
Scenario | Statutory third party policy | Where it actually lands |
|---|---|---|
A visitor slips in the lobby | Responds | The statutory policy |
Fire in the lift machine room | Does not respond | Common property insurance |
A directly employed watchman strains his back | Does not respond | Employees' compensation (Cap. 282) |
An owner sues over a flawed procurement process | Does not respond | Management liability or D&O style cover |
The secretary is prosecuted over unkept records | Does not respond | Depends on the management liability wording |
The market answer is a Directors and Officers (D&O) policy or a comparable management liability wording, built around defence costs and civil damages. Whether a criminal fine is insurable at all is constrained by law and by the wording, so ask before you bind. These policies are normally written on a claims made basis, responding only to claims first made during the policy period, which makes "who answers for the previous committee's decisions" a renewal question.
5. Insured and still exposed
One: restrictive terms are void, and the insurer can then recover from the OC. Where a policy restricts the liability the Regulation requires it to cover by reference to the OC's claims history, the age, condition or maintenance of the building, the number of flats, or the use of the building, those provisions have no effect. But the insurer must pay the third party first, then recover the sum from the OC. The rule protects the injured person, not the corporation.
Two: unauthorised building works and terrorism sit outside the mandatory scope. An OC is not required to insure liabilities arising from unauthorised building works, nor terrorist acts as specified in the Regulation. That is not the same as having no exposure: if a court finds the OC responsible for an accident caused by such works, the damages are still payable. Raise a known UBW history with insurers at renewal.
Three: judgment first, and a ten day clock. Subject to the other exceptions in the Regulation, an insurer must pay a third party up to the policy amount only where a judgment is passed against the OC for the prescribed liability. Separately, once a third party claims, the OC has 10 days from receiving that party's written request to state whether it is insured and give particulars of the policy.
6. Three renewal mistakes
The mistake | What the law says | What to do instead |
|---|---|---|
Treating the Land Registry notice as a one off | The secretary must, within 28 days after the OC has procured the policy, notify the Land Registry of the insurer's name and address and the period covered by the policy, in the specified form | The period changes every year, so build the notice into the renewal routine and file it with the policy |
Last year's notice of insurance still on the board | The insurer should issue a notice of insurance with the policy, and the OC must display it prominently for as long as the policy is in effect | Swap the notice the day the new policy arrives, and minute the date |
Comparing premiums instead of the basis of cover | The statutory floor is not less than HKD 10,000,000 per event available for third party bodily injury or death | Check three things on every quotation: whether that limit is shared with property damage, whether the declarations are accurate, and whether any exclusion has moved |
The third row deserves a note. Since the 2024 amendment, the renewal itself may be a regulated procurement: if the premium exceeds 20 per cent of the building's average annual expenditure over the last three financial years (the reference amount under the Ordinance), it is type 2 high-value procurement and must go out to tender.
Three findings recur when we review an OC's arrangements: the statutory HKD 10,000,000 shares a limit with third party property damage, relief watchmen engaged directly by the OC are missing from the employees' compensation schedule, and a building with known unauthorised works answered "none" on the proposal form. None of them is visible in the premium figure.
FAQ
Q: What is the minimum third party risks cover an owners' corporation must buy?
A: Under section 28 of the Building Management Ordinance (Cap. 344) and its Third Party Risks Insurance Regulation, the minimum is HKD 10,000,000 per event, confined to bodily injury to or death of a third party. The requirement has applied since 1 January 2011, and every person accountable for a contravention faces a fine of up to HKD 50,000.
Q: Does the statutory policy pay when the common areas themselves are damaged?
A: No. It addresses the OC's liability for bodily injury to or death of a third party. Damage to the building's own property, such as lifts, water tanks and meter rooms, falls under what the Home Affairs Department calls common property insurance, which is not compulsory.
Q: A guard or cleaner employed by the OC is injured. Does the third party policy respond?
A: No. They are the OC's employees, not third parties. Section 40 of the Employees' Compensation Ordinance (Cap. 282) requires every employer to insure work injury liability regardless of hours or contract type, with a maximum fine of HKD 100,000 and two years' imprisonment.
Q: Can management committee members end up paying personally?
A: Section 29A of the Building Management Ordinance provides that committee members are not personally liable for acts done in good faith and in a reasonable manner, and since 13 July 2025 that protection extends to secretaries and treasurers who are not committee members. It still has to be established in a dispute, and the defence has to be funded. The same amendment created separate sanctions, up to a level 4 fine of HKD 25,000, for failing to keep specified documents.
Q: Our policy says buildings over a certain age are not covered. Is that allowed?
A: Where such a term restricts the liability the Regulation requires to be covered, by reference to claims history, the age, condition or maintenance of the building, the number of flats or the use of the building, it has no effect. Note the consequence: the insurer must still pay the third party first, then recover that sum from the OC.
Next step
The first move is not a higher limit. It is three checks: whether the statutory HKD 10,000,000 is shared with property damage, whether the common property is separately insured, and whether everyone working in the building sits on a valid employees' compensation policy. Send us the policy, the schedule and the management contract.
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Free Quote
Looper Insurance Agency Limited (GA1034) offers a free policy check and quotations for third party risks, common property and employees' compensation cover, comparing terms 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. The legislation is summarised from Cap. 344 and its subsidiary regulation, the Building Management (Amendment) Ordinance 2024 and Cap. 282, together with Home Affairs Department publications; the original texts prevail. Actual coverage is subject to policy terms and conditions.
免責聲明：本文僅供參考，不構成保險或法律建議。實際保障範圍以保單條款為準。如需專業保險建議，請聯絡持牌保險代理。
Conclusion
A compulsory third party policy is not complete cover. It pays only for bodily injury or death to a third party, leaving the building's own property, directly employed staff and management committee decisions exposed. The renewal mistake most owners' corporations make is treating one policy as the whole answer instead of several. WhatsApp us to check where your OC's cover actually stops.
Felix Kong
CEO
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