All You Need To Know About Business Insurances in Hong Kong

In Collaboration With CCW

Starting a new business in Hong Kong is exciting, but learning about the different types of insurance coverages you need to purchase can seem daunting at times. According to the type of business you are in, there are different risks your company can face, and having the proper insurance coverage in place when you start is a wise move, before even mentioning that some business insurances are mandatory in Hong Kong.

Using insurance coverage to help protect your investment means you’ll have peace of mind as you navigate the challenges and pleasures of starting your new adventure. Business insurance covers companies for a wide range of events and exposures such as weather-related events, public liability issues or cyber threats.

Is business insurance necessary in Hong Kong?

There is only one type of insurance coverage required for all businesses to purchase in Hong Kong: Employee’s Compensation (EC) insurance. The law mandates that every company must carry Employee’s Compensation insurance to protect its employees from potential damages in their workplace.

However, several additional insurance products help make sure companies are protected from a wide range of additional risks. Many potential adverse events may happen, so having insurance coverage in addition to the mandatory EC protection can be extremely helpful.

What is Employee’s Compensation Insurance?

Employee’s Compensation Insurance is coverage designed to protect employees in the course of their work, regardless of whether they are part-time, temporary, or full-time.

As the only compulsory business insurance product in Hong Kong, it is essential to purchase      this coverage when starting your company if you have employees. EC insurance protects staff if they are injured while working, and it protects your company from financial responsibility towards workplace injuries.

There are many different plans to select from, and most major General Insurance carriers sell a version of this insurance coverage.

The Hong Kong government also offers the policy through The Employees’ Compensation Insurance Residual Scheme Bureau Limited to employers that have been denied EC coverage by at least three insurers, or companies with job natures that fall under the High Risk Group (e.g. demolition work, crane operation, window cleaning).

The premium for EC insurance is calculated based on a number of factors, such as the number of employees you have, their job duties, their salaries, and their ages. If you have fewer than 200 employees, the minimum necessary insurance coverage is 100 million HKD. If you have more, the minimum is 200 million HKD.               

Employers who do not carry the appropriate mandatory insurance coverage may face steep penalties and consequences, including:

• Fines up to 100,000 HKD
• Imprisonment for up to two years
• Mandatory payment to the Employee’s Compensation Assistance Fund
• Lawsuits

What are the major non-mandatory insurances?

While Employee Compensation Insurance is the only mandatory business insurance your company must have in Hong Kong, there are several other major types of business insurance you should consider purchasing.

Medical Insurance

Medical insurance is an insurance product designed to help cover medical costs incurred by employees that are unrelated to work injuries. Medical insurance is a key benefit many employees want to have, so it can be a valuable employee benefit you offer.

Medical insurance often covers outpatient, hospital and inpatient treatments. Some policies may also provide dental care, worldwide evacuation maternity care and an annual physical for each patient.

Business Contents Insurance

Business and office contents insurance helps protect the items and physical property in your office from theft and loss. If you lease out your office premises, this coverage can help protect you from damages to the leased property.

Business and office contents policies are often written on an all-risks basis. 

Public Liability Insurance

Public liability insurance is important for many business owners. If you invite the public to your business or event location, having public liability insurance can help to protect you from various liability risks from third-party property damage and personal injury.

Cyber Security Insurance

Cyber insurance is becoming increasingly important, with cybersecurity a growing concern. Many companies are affected by security or data breaches, malware, phishing attempts, and ransomware attacks. Cyber insurance can help protect you from these risks and the expenses associated with mitigating cyber exposures.

Business Interruption Insurance

BI coverage is designed to protect your company from financial losses should your business be closed due to a covered benefit, such as severe weather interruptions, strikes, or government seizures. Typically, the benefits will be specific to the work nature.

If you suffer a loss because you must close your doors to customers for a time, your BI insurance can help.

Professional Indemnity Insurance

Professional Indemnity (PI) Insurance is important supplementary business insurance to consider if your business involves giving professional advice to clients. PI Insurance helps to protect your company against lawsuits raised for inadequate advice or services that have caused harm to your clients. It can also provide coverage for damages and legal defense, such as attorney’s fees and filing costs.

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More about insurances in Hong Kong:

• The 3 Main Types Of Insurance Companies In Hong Kong (And Their Pros & Cons)
• All You Need To Know About Employee’s Compensation Insurance In Hong Kong
• Critical Illness Insurance in Hong Kong : Are You Covered?
• Protect Your Business: 5 Must-Have Professional And Financial Insurances in Hong Kong
• Your Guide To Motor Insurances in Hong Kong
• All You Need To Know On Public Liability Insurance In Hong Kong
• Your Go-To Guide To Event Insurances In Hong Kong
• 3 Reasons To Get Insurance Before You Fly this Christmas
• Do I Need Health Insurance in Hong Kong?
• Home Insurance in Hong Kong: What you need to know
• The HK HUB Startup Insurance Guide