Author
Bowtie Team
Updated on
2025-07-10
Disclaimer: This article is translated with the assistance of AI.
Ever wondered about renovation insurance? A homeowner recently shared online about swapping their bathtub for a walk-in shower, only to be told by management to get a HK$20 million insurance or work will be put on halt—sounds strange, right? Many chimed in that it’s a must-know for property owners. Dive into what this insurance covers, if it’s mandatory, costs involved, and common exclusions to make your next project hassle-free!
What is Renovation Insurance?
Renovation Insurance will provide coverage for financial losses or compensation arising from accidents during the Renovation project.
Types and Coverage of Renovation Insurance
Renovation insurance is divided into 3 categories: (1) Engineering Materials Damage Coverage, (2) Third-Party Liability Coverage, and (3) Employees’ Compensation Coverage.
| Types of Renovation Insurance | Main Coverage Scope | Coverage Amount |
| Materials Damage Coverage | Covers renovation materials such as floors, tiles, wood, sanitary fixtures, etc., against damage or loss due to accidents or theft during the renovation period |
The coverage amount is based on the project cost, with the actual compensation determined by a report from a notary firm |
| Third-Party Liability Coverage | Covers legal liabilities, legal expenses, and compensation for third-party bodily injuries and property damage, or damage to building common areas caused by the contractor’s negligence during the renovation period | Optional coverage ranges from HK$5 million to HK$30 million |
| Employees’ Compensation Coverage ( Employees’ Compensation Insurance ) | Covers work-related accidents for employees during the project | Depends on the number of employees; for fewer than 200, at least HK$100 million per incident; for more than 200, at least HK$200 million |
Reasons to Buy Renovation Insurance
Renovation project accidents are quite common, ranging from property damage to serious injuries or even fatalities, and homeowners might face legal responsibilities, lawsuits, and hefty compensation as a result.
As the saying goes, a wise person doesn’t linger under a shaky wall—so to steer clear of the risks that come with renovation work, getting solid renovation insurance is a smart move.
Plus, renovation insurance specifically targets project-related mishaps, which standard policies might not cover. Even if you have other home or third-party insurance, it probably won’t protect you during renovations. For instance, building management third-party insurance or Home Insurance just can’t step in as a substitute.
Who Should Get Renovation Insurance? Is It Essential?
Construction Materials Damage Coverage and Third-Party Liability Coverage
In renovation insurance, Construction Materials Damage Coverage and Third-Party Liability Coverage are voluntary , but most property management companies or owners’ corporations will require owners or contractors to purchase Third-Party Liability Insurance as a condition for approving the renovation work.
Owners or contractors can take out insurance for the property’s renovation work themselves, and some renovation companies will provide Construction Materials Damage Coverage and Third-Party Liability Coverage for clients, including the premium in their quotes.
Employees’ Compensation Coverage
Employees’ Compensation Coverage (Employees’ Compensation Insurance) should be purchased by the renovation company . As the employer, the company is legally required to buy Employees’ Compensation Insurance for its employees. Before signing a contract, owners should remember to ask the renovation company for proof and check if the Employees’ Compensation Insurance is valid.
If owners think the work is high-risk and want extra protection, they can also ask the renovation company to add their name to the policy as the “project principal.” In case of an accident or injury to renovation workers, the insurance company will cover the owner, handling any liability claims or even lawsuits on their behalf.
| Types of Renovation Insurance | Who Is Responsible for Purchasing? |
| Construction Materials Damage Coverage |
|
| Third-Party Liability Insurance |
|
| Employees’ Compensation Coverage (Employees’ Compensation Insurance) |
Legally required to be purchased by the renovation company for its employees |
Renovation Insurance Coverage in 2 Examples
Case 1: Bathroom Work Causes Floor Collapse
The owner was undertaking interior renovation (including scaffolding work) and had purchased “Comprehensive Construction Insurance” and “Third-Party Liability Insurance” before starting.
During the renovation, the removal of the bathroom caused the floor to collapse , damaging the bathroom in the unit below (a third party), including appliances and fixtures inside.
This incident could lead to third-party property losses , including:
- Costs for rebuilding the floor
- Repair costs for the downstairs owner’s home
- Costs for replacing appliances and fixtures
- Hotel accommodation costs for the downstairs owner during the repairs
Renovation insurance can cover all of the above.
Case 2: Public Water Tap Bursts and Damages Elevators
The owner was undertaking interior renovation and had purchased “Comprehensive Construction Insurance” and “Third-Party Liability Insurance” before starting.
The renovation team coordinated with the building management to shut off the main water valve, replaced the water tap in the insured unit, and everything seemed fine after notifying management to turn the water back on.
A few days later, management informed the insured that the water tap connected to the unit had burst in the meter room, causing a large amount of water to flood the hallway and seep into the elevator shafts, damaging a total of 3 elevators . The management company, on behalf of the owners’ corporation, demanded compensation from the insured.
Generally, after receiving a claim, the insurance company will appoint a notary to investigate.
Assuming the investigation finds that the burst occurred outside the insured unit and not in the part replaced by the renovation team, meaning the incident wasn’t caused by the owner or their hired team, the owner wouldn’t be held responsible.
The insurance company would handle the defense and cover all legal costs involved, but the damaged elevators wouldn’t be compensated.
Which Renovation Insurance is Best and How to Choose the Right One?
There are many companies offering comprehensive home renovation insurance on the market. Policyholders can request quotes and product details from different insurers based on the coverage amount and protections needed for the project, then compare the scope of coverage and policy prices to select the most suitable product.
However, with so many products available, getting quotes for each one would waste a ton of time, right?
Luckily, technology makes things easier these days, and most companies upload their insurance plan details on their official websites. You can keep an eye on these 5 key points to narrow down your options before requesting quotes:
1. Covered Property Types
Some plans only cover “residential” renovation projects. Others accept renovations for commercial, industrial buildings, and more.
2. Age of the Covered Property
Many plans specify age limits for the property, but these limits aren’t the same for every plan.
For example, one plan covers properties up to 40 years old, while another covers residential properties up to 50 years old and non-residential ones up to 40 years old.
3. Free Additional Coverages
To attract policyholders, insurers often add free additional coverages on top of the main protections. You can choose based on your needs, including:
- Warranty Period Coverage
- If losses or legal liabilities occur due to warranty-related work during the warranty period, you can get compensated
- Most companies on the market offer a free warranty period of 3 months
- Client/Owner Property Damage Coverage
- If the contractor accidentally damages property belonging to the owner or tenant during the project, the policy will provide compensation
- While many policies include this coverage, the limits vary, ranging from HK$100 to HK$200 million
- Debris Removal Costs
- In case of an incident, the policy will also cover costs for clearing site debris
- Compensation is often 5% of the total project value
- Project Contract Value Increase Coverage
- Considering that the final project cost might differ from the initial quote, some companies offer free increases in coverage (up to 10% of the total contract value)
- Vibration Coverage
- If vibrations during the project cause damage to third-party property, leading to legal liabilities
- Coverage can go up to HK$10,000
4. Excluded Materials for Coverage
Some plans explicitly exclude projects involving certain materials, so if your project uses those, you’ll need to choose a different plan.
5. Deductible Amount
Renovation insurance includes a deductible, meaning the insured must pay a portion of the losses out of pocket before receiving any payout.
The deductible can be divided into two parts, with different calculation methods:
| Project Materials Damage Coverage | Third-Party Liability Coverage | |
| Calculation Method: | A specified amount based on the total project value per incident
(For example, for a HK$300,000 project, the deductible might be HK$10,000 – 15,000*) |
A specified amount or percentage per item, whichever is higher
(For instance, for existing property damage belonging to the owner or tenant, the deductible could be HK$10,000 or 10% – 15% of the loss*) |
For Health Insurance , a higher deductible usually means lower premiums, but it’s different for renovation insurance—we’ll dive deeper into premiums later.
* Data obtained from the brochures of 2 companies’ renovation insurance
What Influences Renovation Insurance Prices? How Much Does It Generally Cost?
The premium for “Engineering Materials Coverage” is determined by the total cost of the renovation project, the amount for any external wall works involving scaffolding, and the renovation period across three items. The longer the renovation period and the higher the project costs, the greater the coverage amount in case of an accident, which naturally means a higher premium. For “Third Party Insurance,” the coverage amount typically ranges from HK$5,000,000 to HK$30,000,000, with premiums based on the coverage amount, ranging from HK$1,000 to HK$7,000.
Bowtie has referenced the prices of 2 plans online for your reference.
Assuming the following project and insurance scope:
- Total contract amount: HK$300,000
- Third-party liability coverage: HK$10 million
- Contract period: 3 months
- No external works involved
Insurance Company A’s premium is HK$2,100, while Insurance Company B’s is HK$2,400, which aren’t too far apart. As mentioned earlier, a higher deductible in health insurance often means lower premiums, but it’s different for renovation insurance:
| Insurance Company A | Insurance Company B | |
| Premium | HK$2,100 | HK$2,400 |
|
Materials Damage Coverage Deductible |
||
| Engineering Materials Damage Coverage | HK$10,000 | HK$15,000 |
|
Third Party Liability Coverage Deductible |
||
| Third-party property deductible | HK$10,000^ | HK$10,000 |
| Client’s property loss and damage | HK$10,000 / 10% of the loss (whichever is higher) | HK$10,000 / 15% of the loss
(whichever is higher) |
| Loss and damage due to flooding | ||
| Loss and damage due to vibration | HK$10,000^ | HK$20,000 / 20% of the loss
(whichever is higher) |
From the examples above, you can see that a higher deductible doesn’t always mean a cheaper premium, so it’s worth keeping that in mind when comparing options.
- * The plan specifies that, except for losses and damages caused by flooding and the client’s property losses, the deductible for other reasons is HK$10,000.
Common Questions About Renovation Insurance
1. After buying renovation insurance, do I still need to buy workers’ compensation insurance? Who should buy it?
Workers’ compensation insurance for renovation workers should be purchased by the renovation company as required by law for its employees.
2. What situations might not be covered by renovation insurance?
- Scaffolding and exterior wall work
During renovations, many tasks require scaffolding on exterior walls, such as replacing window frames or exterior wall pipes. Due to the higher risk, most third-party insurance policies do not cover scaffolding or exterior wall work. If you want to insure scaffolding work, you usually need to pay an extra fee, and it may limit the cost of exterior wall work, typically not exceeding 15-20% of the total project cost. Some insurers only cover accidents when scaffolding is used. Before purchasing, carefully review the policy terms before signing.
- Buildings aged over 40 / 50 years
Most policies on the market typically limit coverage to buildings aged 30-40 years or less. Older buildings may have more deterioration, increasing the risk of damage during renovations, so buildings over 40 years old may require insurer approval, and coverage amounts could be adjusted.
- When insuring, do I need to buy a separate policy for subcontractors?
No, you don’t. Because the insurer will automatically extend coverage to all subcontractors hired by the contractors listed in the insurance schedule.
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