The CCW Guide to Insurance in Hong Kong
If you are newly arrived in Hong Kong, or if you will soon be relocating to the city, navigating through the endless options for insurance coverage can be difficult.
Understanding which policies are a legal requirement and which policies are not necessary, but may be nice to have, is often a challenge for expatriates in Hong Kong. As such, this guide is intended to give a brief overview of the major types of coverage on offer via international and local insurance companies in Hong Kong, and help you to come to a clearer understanding of the city’s insurance landscape.
1) Medical Insurance in Hong Kong
Medical Insurance is not a necessity in Hong Kong as the city boasts one of the best public healthcare systems in the world.
With hospitals like the Queen Mary and Queen Elizabeth able to supply an excellent standard of care to local residents, at vastly reduced prices over their private counterparts, many individuals and families will find that the healthcare services offered through the public system will be adequate for their needs.
However, the one area where the purchase of a Hong Kong Health Insurance plan may be considered is in relation to Maternity. Simply put, the best Maternity facilities in Hong Kong are extremely expensive, and even the city’s public hospitals now have mandatory pricing for non-residents – foreign nationals who have not yet obtained a Hong Kong ID Card will pay a mandatory fee of HK$ 39,000 for a basic two night maternity package at a government hospital, which does not include the costs of any complications.
The costs of maternity treatment at a private hospital, like the Matilda, far outpace those of the public system; with routine deliveries at these facilities easily reaching HK$ 60,000 to HK$ 150,000. As such, a Hong Kong Health Insurance plan which includes a Maternity Coverage Benefit may be beneficial for families considering having children while in Hong Kong.
Maternity Insurance Waiting Periods
One of the biggest issues in relation to a Hong Kong Health Insurance plan offering a Maternity benefit is the fact that this type of coverage will always be attached to a waiting period.
A waiting period is the length of time you must have held a health insurance plan before you are able to receive coverage for a specific policy benefit. Treatment received prior to the completion of the waiting period is not eligible for reimbursement under the plan.
There are two types of waiting period commonly placed on Hong Kong Maternity Insurance plans, those that occur from the start of the policy and those that occur until conception.
As can be guessed from the name, a maternity insurance plan which includes a waiting period which occurs from the start of the policy will time the availability of maternity coverage from the initial purchase of the plan; normally between 10 – 12 months from the start of the policy, after which all maternity costs can be covered up to the policy limits. However, an until conception waiting period will legislate the time you must wait until you can conceive if you would like the following pregnancy to be covered.
Generally only covering conceptions which have occurred more than 12 months after the purchase of the plan, a maternity insurance policy with an until conception waiting period will only provide coverage for maternity treatments, including deliveries, where the actual conception of the infant has occurred after the policyholder has held the policy for at least 12 months prior.
Types of Health Insurance in Hong Kong
When looking for health insurance coverage in Hong Kong it is important to understand that there are two main policy variants. These are Local health insurance and International Health Insurance.
While both variants are designed to protect you against the costs of your medical care the ways in which they operate will be slightly different. For example, Local Health Insurance plans, from a company like BUPA Hong Kong, will generally have their premiums calculated based on the policyholder’s claims history under the plan. This means that a local option will often look like extremely good value for money at the initial policy purchase, but in the event of a claim can quickly become very expensive due to the policyholder’s claims risk to the insurer after a treatment event.
In contrast to this International Health Insurance policies will normally have premiums calculated on a community basis with Age as the main calculation factor. As such, with an International Health Insurance plan your premiums will not increase because of claims made under the policy but will get more expensive as you age.
Additionally, Local Hong Kong Health Insurance policies will normally only provide coverage within the borders of HKSAR, while International Health Insurance plans will allow for coverage on a Global Basis.
There are a number of additional differences between local and international variants of Health Insurance in Hong Kong, such as renewal age and choice of provider, but it should be understood that depending on the type of coverage you select there may be a significant impact on your ability to actually utilize the policy to the maximum.
2) Car Insurance in Hong Kong
If you own a Vehicle in Hong Kong then it is a legal requirement that you possess Car Insurance coverage for that vehicle; in order to receive a vehicle registration license from the HKSAR Government you must present a valid certificate of insurance along with the requisite supporting paperwork.
However, there is a wide range of choice for your Car Insurance coverage in Hong Kong with many different insurance companies providing an array of options. Policies are usually split into two main types in this regard; Third Party and Comprehensive.
Third Party Car Insurance
Third Party Car Insurance in the minimum legal requirement for your Motor Vehicle Insurance policy in Hong Kong. At its core this type of coverage will protect you against your liability to third parties in the event of an accident resulting in a personal injury or death.
While it is possible to obtain Third Party Only car insurance coverage, most insurers will generally include coverage for Third Party property damage, also known as Section (II) Insurance.
Comprehensive Car Insurance
Comprehensive Car Insurance provides more coverage than a Third Party policy. A Comprehensive plan will include basic Third Party protection in addition to extending the cover to vehicle theft and damage.
Obtaining a Comprehensive Car Insurance policy will ensure that you are protected against the costs of repairing damage to your vehicle even if you are at fault, and that you will be compensated in the event of your car being stolen. However, due to the expanded coverage under a Comprehensive Policy it is important to understand that this type of coverage is generally more expensive than a basic Third Party Car Insurance plan.
No Claims Discounts and Car Insurance Premiums
There are a number of variables which will be used to calculate your car insurance premium under both a Third Party and Comprehensive policy, including your Age, driving experience, and occupation, in addition to the car’s age, engine size, and make. However, an important aspect of your premium calculation is the amount of No Claims Discount which you are able to receive.
No Claims Discount, or NCD, is a discount you will receive on your car insurance premium in the event that you can prove you have not had a car insurance claim for more than 1 year. A single claims-free year will entitle you to 20% off the total premium value, and five or more claim-free years will allow you to receive a 60% discount on the total premium.
NCD is fully transferable in Hong Kong, so if you find a better Car Insurance deal for your policy then it is a simple case of notifying the insurance company that you will be switching to a new provider.
3) Home Insurance in Hong Kong
Home insurance is another type of product line where there are choices in the coverage which you can obtain, however most expatriates in Hong Kong will find simple Home Contents insurance sufficient for their needs. The two types of Home Insurance policy available in Hong Kong include Home Contents Insurance and Fire Insurance.
Home Contents Insurance
Home Contents insurance, also known as Renters Insurance elsewhere in the world, is not a legal requirement in Hong Kong. This type of insurance will cover your items and household possessions against loss and theft, but will not protect the physical structure of your home.
Home Contents Insurance plans will normally be able to provide protection for your household items and personal possessions on an “all risks” basis, meaning that unless specifically excluded from the policy you will be compensated for any accidental or unforeseen loss or damage to your possessions inside your home whether due to Fire, Flood, or Theft.
Additionally, it is possible to extend this “all risks” coverage on a worldwide basis, ensuring that should anything happen to your belongings, anywhere in the world, that you will be able to replace the item. Worldwide All Risks coverage is usually taken out on such items as Engagement Rings, Watches, and computer equipment under a Home Contents insurance policy.
In order to cover valued items like a single engagement ring, it is normally necessary to obtain a Home Contents insurance policy and specify the coverage for the possession on the policy. Coverage is not normally afforded to single possessions on a stand-alone basis.
Fire Insurance is a type of home insurance policy designed to protect the physical structure of your property against fire damage. While not a legal requirement for renters, it is likely that you will be asked to obtain this type of protection if you own your property with a mortgage.
Typically only obtained by the actual owner of a structure, a Fire Insurance policy can be extended to include coverage for “allied perils” furthering the fire protection to include coverage against Floods, and Typhoons.
This type of policy is designed to provide coverage for the rebuilding costs of your home in the event that it is damaged due to one of the covered perils, and will not be of use to all Hong Kong residents.
4) Maid Insurance in Hong Kong
All employers in Hong Kong are legally required to purchase an Employees Compensation Insurance policy for their employees, regardless of the employee’s duties or working hours.
As domestic employees, all Maids and Domestic Helpers in Hong Kong must be covered by a Maid Insurance policy which includes Employees Compensation Insurance Coverage.
The employee compensation coverage you must obtain for your domestic helper will protect you against your liability of the helper injuring themselves, or falling sick, during the course of their employment. In the event that your helper becomes injured while on the job, then the Maid Insurance policy can provide weekly payments in lieu of your salary payments during their recovery. Additionally, many Maid Insurance employee compensation policies will provide a death benefit, to be paid to your helper’s dependants, in the event of the helper’s death during the normal course of their work.
While only basic Employee Compensation insurance is required for your Hong Kong Maid Insurance plan, it is important to note that you can extend this type of insurance to include coverage for Medical Insurance, Personal Accident Insurance, and even your costs of finding a replacement helper in the event that your previous maid is unable to work.
However, one of the biggest issues with Maid Insurance coverage in Hong Kong is the fact that many of the extended coverage options cannot be taken for helpers who have reach 64 years of age. While the basic employee compensation portion of this coverage will still be available, many insurers will deny the extended coverage benefits to maids over the age of 64 while others may charge an additional premium for the same coverage.
5) Life Insurance
The options for Life Insurance Coverage in Hong Kong are both wide and diverse. From Term Life insurance to Whole of Life protection, a life insurance policy can help ensure that your loved ones have the security they deserve in the event of your death.
Life Insurance is not a legal requirement for Hong Kong residents, so the choice of whether or not to purchase this type of coverage is left entirely up to you.
Term Life Insurance
A Term Life Insurance policy will provide a lump sum settlement, also known as a death benefit, to your beneficiaries in the event of your death during the policy’s term.
Under this type of life insurance plan, coverage against your risk of an untimely death is provided in specific lengths of time, often 5, 10, 20, 25, or 30 years. This duration of time is known as the “term” of the policy. Should you die during the term offered by the plan the policy will provide financial support to the beneficiaries you have named.
Term Life is a simpler type of life insurance, as you will choose the length of the policy’s term when applying for the coverage. However, it is important to note that only your death during the term will be covered with a settlement payment. If you chose to take a Term Life plan where the coverage duration of the policy was 5 years, but you died 5 years and 1 day later, then no benefit would be due from the insurance. Additionally, Term Life plans will generally only provide a death settlement and cannot normally be extended to include additional coverage.
Whole of Life
Also known as Universal Life, or Cash Value Life Insurance, a Whole of Life Insurance plan will cover you against your risk of death for the rest of your life.
As with a Term Life Insurance plan, a Whole of Life policy will also provide a lump-sum settlement to your beneficiaries in the event of your death. However, in addition to the lump-sum death benefit offered, a Whole of Life insurance plan can often be customized to include Disability Income and Personal Accident Insurance coverage, in addition to Savings options with guaranteed investment returns. This makes a Whole of Life insurance policy not only good for ensuring that your loved ones have support in the event of your death, but also means that this type of plan can be used as an estate planning vehicle; helping you to save for your children’s education or your dream summer home.
The downside of a Whole of Life insurance policy is that it will typically be more expensive than Term Coverage, but does offer higher levels of protection which can normally be tailored to your needs.
Your Insurance Options In Hong Kong
There are many options for your insurance coverage in Hong Kong. Even within specific coverage types, such as Maid or Car insurance, there are a range of options which can suit a wide array of specific needs.
Cooper Claridge-Ware is a specialist Hong Kong Insurance Broker working with a comprehensive range of policy types – providing coverage options for Business Insurance, General Insurance, and Health and Life Insurance lines.
If you would like assistance with your insurance needs in Hong Kong please contact Cooper Claridge-Ware Today.