What to Know About Insurance in Hong Kong?

Posted by stevethomas on Wednesday, June 19, 2013

Cooper, Claridge-Ware is a company Guest Blogging on the Maxim website & are a leading International Insurance Brokerage, based in Hong Kong.

Hong Kong, Asia’s World City, it’s a perfect mix of East-Meets-West set against the backdrop of one of the world’s most vibrant economies.

While many facets of your life in Hong Kong may be different from what you expected (and might actually be a severe departure from your life at home – you will probably have a domestic helper now, after all), insurance in the city is actually fairly straight forward. This doesn’t mean that insurance will be entirely along the same lines as the products you are used to, especially if you’re coming from the European Union or Middle East, but the basic concept of protecting you against some form of risk will remain largely unchanged.

That being said, it might be a good idea to look at some of the most common forms of coverage which you are likely to encounter during your time in the city:

Domestic Helper and Maid Insurance
One of the most common aspects of life in Hong Kong is the fact that nearly everyone you will meet in the city is the employer of a domestic helper (also known as a Maid).
However, just like your employer needs to provide employee compensation insurance coverage to you during the course of your normal job, if you hire a domestic helper then they must also be covered by an employee compensation insurance policy purchased by the head of the household.

Employee Compensation coverage is a legal requirement under Hong Kong laws and must be purchased to provide protection to any and all employees, no matter whether their duties are part time or full time, against their risk of suffering from injury or illness during the course of their normal job duties.  However, if you choose to employ a domestic helper then it is also important to note that, in the event of your helper becoming sick, you are legally obligated to cover the costs of their healthcare treatment. Because of this many Hong Kong Insurance Companies will offer Maid Insurance options which expand on the mandatory Employee Compensation coverage by including benefits for health insurance, dental insurance, and even repatriation insurance.

Car Insurance
Hong Kong has one of the best public transport systems in the world. With the endless Double-decker buses, the easy to use MTR Subway system, the legions of taxis and even those F1 drivers operating the fear inducing Red Mini-Buses there isn’t a great need to own a car when you’re living here. Having said that though, Hong Kong is home to the highest density of luxury cars anywhere on earth (where else do government subsidised housing estates possess rows of parked Rolls Royce’s?) and you could well debate taking the plunge towards owning a vehicle for the duration of your stay.  As with other countries around the world it is a legal obligation that you obtain Car insurance if you own a vehicle. So if you are considering purchasing a car then it will be important for you to consider your car insurance options in relation to the vehicle you are looking to obtain.

The most basic form of Car insurance coverage available, which is the minimum amount of protection as mandated by the Hong Kong government, is Third Party Coverage. This type of insurance protection will cover you for your liability to a third party’s risk of injury or death following an accident; although almost all Third Party Only policies (as this type of coverage is known) will also provide cover for your risk of damage to property.

The second type of insurance coverage which is readily available throughout the city is Comprehensive Car insurance protection. Including basic Third Party coverage, a comprehensive policy will also include coverage for damage to, or loss of your vehicle.

Obviously a Third-Party only policy will be less expensive than a comprehensive policy, but if you’ve purchased a nice new car and are concerned about the vehicle getting stolen (not a huge risk in Hong Kong) then you may well want to pay the higher price for comprehensive protection.

Health Insurance
Not actually a necessity in Hong Kong due to the city’s excellent public medical services (the Queen Mary and Queen Elizabeth Hospitals are some of the best in the APAC region), many newly arrived expatriates will nevertheless want to look at their health insurance options in the city.  Unlike in the USA you do not have to purchase health insurance while working in Hong Kong, and in some cases your company may have actually obtained medical insurance coverage on your behalf. But if you want to use the city’s best private Hospitals, like the Adventist or Matilda, you should have a very high quality policy unless you’re prepared to pay a large portion of the costs out of pocket.

There are actually two types of health insurance coverage which are readily available throughout the Hong Kong insurance market; Local Health Insurance and International Health Insurance. While these two different types of policy are designed to do the same thing (namely protect you against the costs of your healthcare treatment) they will go about this in fundamentally different ways.  Some local Health Insurance plans will often have their premiums calculated based on the claims experience of the individual being covered by the policy. This means that when first purchased a local health insurance plan will often seem like extremely good value for money. However, should any claims be made under the plan you can almost guarantee extremely steep rises in the cost of coverage. This is also made worse by the fact that the coverage limits under most Local Hong Kong Health insurance plans are not overly high, and that any significant illness you suffer will drastically reduce the overall coverage available to you under the lifetime of the plan.

International Health Insurance options will be community rated, with all individuals of the same age, with the same coverage, in the same coverage area, paying exactly the same premium as each other. However, the major factor in international health insurance premiums is age, and as you get older the cost of your coverage will increase, no matter what; and the coverage is often much more expensive than a local plan when first purchased. However, the good news here is that claims will not impact the cost of your coverage  - enabling you to use the plan as and when you need to – and that the initial limits are much, much higher than those found on the local options.
There are a number of additional differences between these two types of Hong Kong health insurance coverage, but the above should serve to give you a general idea of the major variances between the two options.

Home Insurance
Once you’ve recovered from the minor stroke you received while looking at rental prices (good thing you’ve got medical insurance; it’s hard to believe London and New York property could ever look cheap!), you’ll probably want to think about protecting your belongings.  As you’ll have probably noticed most apartments in Central and Western will have security guards and security equipment installed just to be on the safe side, and thefts from residences in high-rise apartments in the swankier parts of town are actually quite rare. However, if you want to ensure that you are protected against the loss of, or damage to your personal possessions then a Home Contents Insurance policy is probably the plan for you.

With a premium calculated based on the total worth of your possessions, and policy benefits which will cover your items on a worldwide all-risks basis, you can get the assurance you need that even if you happen to leave your laptop in the taxi while on holiday in Bali (it has been known to happen) you’ll be able to receive much needed reimbursement for the purchase of a new one.  If you’ve taken the bold step of actually owning a property in Hong Kong then in addition to Contents insurance you will likely need to obtain Fire Insurance against the actual rebuilding costs of your home. While not obligatory under Hong Kong Law, many banks will require that you have purchased a Fire Insurance policy before finalizing a mortgage on the property.

Life Insurance
The final type of insurance plan which you are likely to encounter during your stay in Hong Kong is Life Insurance. Available in the form of Term Life Insurance or Whole of Life Insurance products, life insurance coverage will ensure that your dependents and named beneficiaries will receive compensation in the form of your untimely death.

Additionally, many companies and businesses are increasingly taking out Key Man Life Insurance coverage on valued employees. A Key Man policy will be purchased by an employer to cover the untimely loss of a vital asset to the organization; if, for example, the individual responsible for the creation of a company’s marketing campaign should die unexpectedly then the Key Man Life insurance policy will provide monetary compensation to the business – allowing the company to find a new employee to fill the role, or to simply cover their overall losses while they change tactics. If you have been recruited to Hong Kong from another part of the world because of your expertise it is likely that your employer may elect to purchase Key Man Life Insurance coverage on your behalf.

So there you have it, a guide to the most common forms of Insurance coverage available in Hong Kong. Your coverage options are many and varied, and you will have a plethora of different providers to choose from when considering the right plan for your needs.

About the Blog Contributor
Cooper, Claridge-Ware is a company Guest Blogging on the Maxim website & are a leading International Insurance Brokerage, based in Hong Kong.
Cooper Claridge-Ware is able to advise on a comprehensive range of Hong Kong Insurance products including: Health Insurance, Life Insurance, Motor Insurance, Home Insurance, Maid Insurance and Many More.
For more information please visit http://hk.ccw-global.com or call us on +852 3753 8899.