Property Insurance and Pecuniary Insurance 財產保險及經濟權益保險

Fire and Extra Perils Insurance 火災及附加危險保險

A fire claim requires actual burning of something that should not be burning, without the insured deliberately causing or arranging it. Where fire is the proximate cause, the insured property need not itself burn: smoke, heat, firefighting water and reasonable firefighting action can cause recoverable damage, even when the fire starts next door. Basic cover also includes lightning without a resulting fire and limited explosion cover for gas or boilers used for domestic purposes.

Extra perils such as storm and typhoon, riot and strike, subsidence and landslide, and vehicle impact require selection in the policy schedule and an additional premium. War, nuclear risks and terrorism are usual exclusions; theft during or after a fire is specifically excluded. Under-insurance normally brings average into operation, reducing the covered loss in the ratio of the sum insured to the property's full value. Basic cover usually has no excess, although certain extra perils do. Buildings, stock, machinery and other contents may have separate sums insured; premiums generally apply a risk-based rate to those sums.

Fire business interruption insurance is pecuniary insurance for loss of gross profit, necessary and reasonable additional expenses, and wages where included, following an insured event. Gross profit must follow the policy definition rather than the accounting definition. The typical material damage proviso requires material damage insurance on the same policyholder's relevant property interest, together with an admission of liability or payment by that insurer for the damage causing the interruption. The two covers may technically have different insurers, although Hong Kong insurers are unlikely to provide business interruption cover without the related material damage cover.

The maximum indemnity period runs from the insured accident and limits the period of recoverable business interruption loss; it may be as short as three months or much longer, for example 18 months. Selection should reflect the time needed to restore normal business, including replacing specialist equipment. Loss assessment normally uses the comparable period last year, with adjustments for trends unrelated to the insured event. Premium calculation starts with the fire rate for the building's contents and then allows for the time element.

Property “All Risks” Insurance 財產「全險」保險

“All risks” cover starts with accidental loss or damage and then narrows that cover through exclusions. The insured must first establish accidental loss of or damage to insured property. An insurer relying on an exclusion must then establish that it applies. The exact cause need not always be identified, but accidental loss or damage must still be proved.

Common exclusions include wear and tear, depreciation, and losses caused by light, vermin and atmospheric conditions. These involve inevitable deterioration or risks that routine care and reasonable precautions should address. War, nuclear risks, terrorism, deliberate loss caused by the insured, and losses suffered while participating in illegal activities, including confiscation by customs or other authorities, are also usually excluded.

Unspecified property is likely to be subject to average; average does not necessarily apply where every item has its own sum insured. Valuable articles may have agreed value cover, commonly supported by an independent professional valuation: a total loss is settled at the agreed sum without reassessing actual value at that time. Merely specifying an item's sum insured does not establish agreed value cover.

Originally associated mainly with personal valuables such as jewellery and furs, this cover is now also widely used for commercial property, particularly by large clients. Premiums generally apply a rate to the sum insured, with geographical scope affecting the rate; worldwide cover is usually the most expensive.

Theft Insurance 盜竊保險

Standalone theft policies mainly serve commercial risks, covering property loss or damage from theft or attempted theft. Cover usually requires forcible and violent entry to or exit from the premises, such as a forced lock or broken window; either entry or exit can satisfy the condition. The force concerns the premises' security defences, rather than violence against people. Damage to the insured premises in gaining such entry or exit is normally included without a separate sum insured, while stock and other contents usually have separate sums. In Hong Kong, the older title burglary insurance may still be used.

Theft by employees, or involving their collusion, is excluded and belongs under fidelity guarantee insurance. Fire damage is also excluded, even where thieves start the fire to destroy evidence. A hold-up extension can cover theft involving actual violence or threats of violence against people; personal accident cover for employees may also be added.

Full-value policies normally apply average. Where a total or very large loss is unlikely, first loss insurance may permit a sum insured below the declared total property value, saving premium. The permitted lower sum does not itself trigger ordinary average, but declaring less than the actual total value at the time of loss still attracts a similar reduction. A floating policy instead provides one combined sum insured across several stock locations where individual location values fluctuate.

Where specified locks, bars, key controls or other security arrangements are warranties, breach automatically discharges the insurer from policy liability from the date of breach. Attractive targets such as gold, jewellery and furs usually attract stricter terms and higher premiums; risk surveys are also common. Premiums generally reflect the sum insured and the property's attraction to thieves.

Glass Insurance 玻璃保險

Glass insurance provides “all risks” cover for actual breakage of insured fixed glass, including necessary temporary boarding-up costs. Large or tinted fixed panes in Hong Kong shops and buildings can be expensive to replace, creating a need for separate cover. The older title plate glass insurance also refers to this protection for fixed glass installations.

Risks insurable under fire insurance, such as fire, storm and earthquake, are normally excluded. Loss caused by deteriorating frames or framework, and scratching without actual breakage, are also excluded. Other usual exclusions include war, nuclear risks and terrorism. Strike and riot are normally excluded too, so any available extension under the glass or fire policy must be checked.

Words, pictures and other decoration on the glass must be specified to be insured; otherwise settlement concerns the glass itself. Business losses and additional expenses following breakage are normally excluded, with necessary temporary boarding-up costs expressly included. Premiums generally depend on the glass area, with quality also affecting the charge.

Money Insurance 金錢保險

Money insurance normally provides “all risks” cover. Money can include cheques, bank drafts and other financial documents as well as legal tender. Damage caused by thieves to safes or strong-rooms is usually included alongside loss of money. Insured locations may include transit, business premises and specified employees' homes, with different sums insured or limits for different locations.

Cover normally concerns business money, and transit cover commonly has restrictions on normal business hours, messengers and territory. Business takings are not automatically insured at every time or on every journey: where the wording limits transit cover to normal business hours, business ownership of the money does not overcome that restriction.

Security conditions may require money to be kept in a safe, allowing exceptions only for limited amounts and periods, and deposited with a bank as soon as possible. Transit conditions may specify male escorts, with at least two required above a stated amount; the method or route may also require agreement. The actual wording determines these requirements.

Employee theft and losses involving employee collusion are normally excluded and belong under fidelity guarantee insurance. Premiums generally apply a rate to estimated annual money carryings to and from the bank, with a provisional premium adjusted annually against actual figures. Proper records support both proof of loss and premium adjustment. A personal accident extension for employees injured by thieves is also common.

Fidelity Guarantee Insurance 忠實保證保險

Fidelity guarantee insurance is pecuniary insurance protecting an employer against loss of money or property through employees' fraud, theft or other dishonesty in the course of employment. It can concern cash and stock; ordinary errors, omissions or negligence do not by themselves constitute insured dishonesty.

Individual cover names employees with specified limits. Combined cover uses a schedule of names or positions, with individual sums insured, a shared floating sum, or both. Blanket cover includes all employees, usually divided into categories such as inside or outside staff and those handling or not handling cash, with separate sums insured.

Checking and supervision systems are important underwriting factors, and an approved system must not be changed without the insurer's written consent. Knowledge or reasonable suspicion of dishonesty must be reported in writing within the period specified, for example seven days after discovery; seven days is not a universal deadline. Cover for that employee is suspended until the insurer is satisfied that it can continue, while some policies provide for immediate automatic cessation following discovery.

Premiums generally apply a rate to the guaranteed amount, with the nature of the work strongly influencing the rate. After the insurer pays the employer, the dishonest employee remains legally liable to reimburse the insurer. Forgiving the employee or keeping them employed does not itself restore suspended or terminated cover.

Surety Bonds 保證書

A surety bond involves three parties: the principal, who owes the obligation; the obligee, who is entitled to its performance; and the surety. The principal pays a fee for the surety's financial guarantee to the obligee that statutory or contractual obligations will be fulfilled. Insurers and banks can act as sureties. The protection benefits the party requiring the bond.

A common performance bond example is a contractor providing a completion guarantee to a developer. If the contractor fails to perform, the developer may claim against the surety under the bond, up to its amount; the surety then has a right to recover its payment from the contractor. Claims follow the bond's own terms, and most ordinary insurance exclusions and limitations do not apply to bond claims.

Besides deciding whether to pay or deny a claim, a surety may finance completion by the contractor or take over the remaining work with appointed construction professionals. The payment to the surety is a fee or charge, normally paid once. A bond normally has no expiry date and needs no renewal, although the designated time for performing the underlying contract may be extended.

The form of bond covered here requires writing, signature, sealing and delivery. This formal execution enables the obligee to enforce the bond despite providing no consideration to the surety. To support later recovery, the surety usually requires personal counter guarantees from directors of the principal, directors of its parent company, or other acceptable persons.