What is third-party liability insurance? What insurance should I buy for home renovations? Kwiksure clarifies the differences between home insurance and renovation third-party liability insurance, breaking down in detail the purchase responsibilities of homeowners and renovation companies, liability protection for leaks/falling windows/ceiling construction accidents, as well as the coverage provided by third-party liability insurance.
Third-party liability insurance means that when an insured person causes property damage or personal injury to a third party due to an accident, the insurance company will cover the insured person's liability for compensation and litigation costs, and will also handle legal negotiations on behalf of the insured person.
Third-party liability insurance covers legal liability for injuries or property damage to others caused by personal negligence in daily life, including litigation costs, legal fees, expert report fees, etc.
Home Insurance typically covers personal injury and property damage caused by accidents, including aluminum windows flying off home windows, falling decoration materials injuring passersby, or causing property damage, and the insurance will pay the relevant compensation.
If a unit experiences a water leak due to a burst pipe or negligence in the water supply system, causing damage to the ceiling of the unit below or in a neighboring unit, or even to external public facilities, home insurance can usually cover the repair and compensation costs of water supply equipment.
If a fire is caused by an electrical malfunction in your home and affects others, it is covered by third-party liability insurance. The insurance will compensate for personal injury or property damage caused to third parties by an accident involving a household appliance in your residence.
Some home insurance policies cover pet-owning households. If a pet bites someone or accidentally causes property damage to a third party, compensation can be claimed through third-party liability insurance.
If damage occurs in a residential building or common area, such as an elevator or corridor, and the cause is a home accident, the insurance will cover the relevant compensation costs.
If the insured or their family members living in the unit are injured due to the negligence of the visitor, such as being hit by falling objects or slipping on a wet floor, the third-party liability insurance will also cover the medical expenses incurred.
Even when a unit is rented out, legal responsibility doesn't solely fall on the tenant. The landlord may also be liable for injuries to third parties or accidents affecting the unit. Third-party liability insurance can cover bodily injury or property damage caused to third parties due to accidents, such as structural defects like ceiling leaks or concrete peeling that result in injury or property damage to tenants or neighbors. However, this coverage only applies to third-party liability and does not cover losses incurred by the landlord due to tenants being overly aggressive.
If landlords require an insurance plan specifically for their rental units, they can opt for landlord insurance that includes third-party liability coverage. Landlord insurance primarily protects landlords against situations such as tenants maliciously withholding rent, damage to property caused by vandalism, and legal costs incurred in recovering rent and reclaiming the property.
Third-party liability insurance for renovation projects, also known as public liability insurance, protects the contractor, owner, or tenant against legal liability arising from accidents during the renovation period that cause personal injury or property damage to third parties. Examples of such accidents include accidentally drilling through a neighbor's wall, accidentally damaging pipes, or inadvertently injuring passersby while erecting sheds.
Although third-party liability insurance for renovations is voluntary, most property management companies or owners' corporations require owners or contractors to purchase third-party liability insurance before approving renovation work.
Homeowners can purchase insurance for their renovation projects themselves. Some renovation companies also offer third-party liability insurance and damage to construction materials insurance, including the premium in their quotes. If homeowners choose third-party liability insurance purchased by the renovation company, they must understand the insurance arrangements and costs, and confirm that the policy lists the information of both parties and that the coverage extends to the homeowner. Otherwise, homeowners should purchase their own insurance and be aware of the coverage scope and validity period.
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Third-party liability for home renovation |
Third-party liability for residential properties |
Third-party liability for building corporations |
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Coverage |
During the renovation project, the contractor shall provide protection against personal injury or property damage to third parties caused by negligence during construction. |
Third-party liability arising from the negligence of oneself, family members, or domestic helpers in daily life. |
Protect the common areas and facilities of the building from accidents. |
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Protection location |
The interior of the residential unit where the work is being carried out, as well as damage to public areas or adjacent flats caused by the renovation work. |
The interior of a private residential unit and its designated adjoining private spaces, such as terraces and rooftop private areas. |
Public areas and facilities of the building, including the lobby, elevators, exterior walls, and public corridors. |
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Warranty period |
During the renovation construction period |
The policy is typically valid for one year and requires annual renewal. |
The policy is typically valid for one year and requires annual renewal. |
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Purchaser |
The insurance should be purchased by the homeowner or the renovation company, and the policy should list the information of both parties. |
Purchased voluntarily by the unit owner or tenant at their own expense. |
Compulsory purchase by owners' corporation under Hong Kong's Buildings Management Ordinance |
Most third-party renovation insurance policies have age restrictions, typically only covering buildings under 40 years old. Because older buildings are often in disrepair, the risk of damage during renovations is higher. Therefore, buildings over 40 years old may require insurance company review for coverage, and even if covered, may incur higher deductibles or additional premiums.
Due to the high risks and dangers associated with scaffolding and exterior wall construction, most third-party liability insurance policies for renovations do not cover these projects. If scaffolding work is required, insurance companies typically require additional premiums and limit the cost of exterior wall work, such as not exceeding 15% of the total project cost. Furthermore, even when some insurance policies cover scaffolding and exterior wall work, they usually only cover accidents occurring while using the scaffolding; accidents occurring during the erection or dismantling of the scaffolding are not included. Therefore, careful consideration of all coverage terms is essential when purchasing insurance.
Home renovation insurance typically specifies the construction period, also known as the "coverage period." If the project needs to be extended, the policyholder must notify the insurance company to extend the coverage period and pay an additional premium to continue receiving coverage. Because renovation insurance premiums are based on the scope of the renovation, if work beyond the initial quote is performed during the construction period, the insurance company has the right to refuse compensation.
Most renovation and third-party liability insurance policies explicitly exclude illegal alterations, unauthorized additions, and unapproved construction projects from coverage. If an accident or third-party injury or death occurs during renovations due to illegal structural elements, such as alterations to main walls, unauthorized additions to terraces or platforms, the insurance company has the right to refuse compensation. Construction work carried out without approval is an illegal act. Upon conviction, they are liable to a fine of HK$400,000 and imprisonment for two years.
Even with labor insurance, homeowners still need to purchase "renovation third-party liability insurance." Labor insurance only covers the legal liability for injury or death of workers due to accidents during the construction period. It does not cover the legal liability for injuries to neighbors, damage to public property, or damage to third-party property caused during the renovation period. Therefore, it is necessary to purchase renovation third-party liability insurance and renovation project insurance.
Although there is no legal requirement to purchase third-party liability insurance for renovations, it is strongly recommended that homeowners or tenants purchase it for added protection. Even with simple painting work, accidents can still occur, such as strong paint fumes causing discomfort or allergies to third parties, or accidentally soiling neighbors' property during the painting process.
Most home insurance policies on the market do not adequately cover home renovation projects. Since home insurance is not specifically designed for renovations, the "third-party liability protection" coverage generally only compensates for third-party liability caused by the negligence of the insured, their family members, or domestic helpers; losses caused by the renovation contractor are not covered. Therefore, homeowners need to purchase separate "renovation project insurance" or "home renovation insurance" when renovating.
No. The building's third-party insurance only covers accidents caused by the corporation's negligence in the building's common areas. If the leak is in your private unit, the liability for compensation falls on you, and you will need to cover the cost using your own home insurance.
Generally not. Since homeowners' home insurance and fire insurance usually only cover the property and structural safety of their own unit, if a tenant causes a fire due to improper use of appliances and it spreads to neighbors, the tenant will be responsible for the property damage and legal liability caused to neighbors due to their negligence in causing the fire.
Kwiksure has over 20 years of experience in the home insurance industry, comparing quotes from over 60 insurers in Hong Kong. Use our online quotation tool now to get a free home insurance quote!
The above information is for reference only. Kwiksure takes no responsibility for the accuracy and timeliness of the information. For the coverage, mode of compensation, benefit limit and premium levels of any specific insurance plan, please refer to the relevant policy terms.
Cassidy is a content creator at Kwiksure. She mainly writes about cars and travel. She has previously worked in advertising creation and online media editing. She loves writing and is keen on discovering the latest topics. She is committed to bringing fresh, interesting and practical information to readers.
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