OneDegree survey reveals about 96% of homeowners hold misconceptions about fire insurance

Next-generation insurer OneDegree Hong Kong today unveils the results of an online survey that looked into homeowners’ familiarity with fire insurance. With an aim to raise awareness of the importance of choosing the right protection for properties, 1,107 homeowners participated in the survey conducted in October this year.

The survey findings uncover that a majority (96%) do not fully understand their fire insurance policies. Respondents are in general confused about the charge, insurance mechanism, benefits and coverage. The results bear a striking resemblance to survey findings nearly 20 years ago1, showing a need for greater efforts to educate homeowners about fire coverage and their rights when purchasing fire insurance.

The majority of respondents were confused about fire insurance

• Only 4% of surveyed homeowners knew precisely both the maximum benefit limit (reinstatement cost) and beneficiary of their fire coverage (lender bank).
• 15.6% of respondents correctly picked the reinstatement cost when asked about the maximum benefit limit, while nearly one third (30.6%) did not know the amount.
• Only about a quarter (27.6%) accurately identified the lender bank as the beneficiary. Nearly half (47.7%) misunderstood the beneficiary as themselves or someone they designate.
• Less than one in ten (9.4%) respondents have insured their properties for the building reinstatement cost, while the value of property (43.9%) and mortgage loan amount (31.2%) are more common sum insured options among the surveyed homeowners.

Less than one-third could accurately differentiate between fire and home insurance

• Although more than half (54.9%) of the homeowners surveyed claimed they understand the difference between fire and home insurance, only 31% were able to answer correctly all situational questions about the coverage.
• Some respondents mistakenly thought that fire insurance covers home contents (54.3%) and expenses such as temporary rental (39.3%) in the case of damages caused by a hazard.

Nearly three-quarters of homeowners got fire coverage from banks or their agents

• While banks may charge more for fire coverage than other insurers, most respondents reported that they got insurance directly from the lenders (48.7%) or their partnering underwriters (25.6%).
• Only a quarter (25.7%) of surveyed homeowners were aware that they can shop around.

Arthur Lee, Chief Executive Officer of OneDegree Hong Kong, said, “The survey reveals that many homeowners are not sure what they are paying for, and this lack of knowledge often results in uninformed coverage decisions. People also instinctively turn to their lenders for this insurance when taking out a mortgage, not knowing that they can shop around to find the best deal. The findings, meanwhile, reflect that the fire insurance market is dominated by banks and their partnering insurers. Our mortgage fire insurance aims to offer homeowners an affordable alternative, helping them understand their rights and make smarter decisions to get the right level of insurance at a reasonable cost.”

The findings help OneDegree Hong Kong to better understand the market and solve customers’ long-standing pain points through its fire insurance product. With OneDegree Fire Insurance, homeowners can customize their coverage to meet their lenders’ requirements while saving the trouble of comparing plans and going through all details. They can easily enroll online and OneDegree Hong Kong will handle the rest by submitting to their lender all necessary documents. The homeowner will receive a notice once the policy switch is confirmed.

Currently, nine banks in Hong Kong accept the fire coverage provided by OneDegree Hong Kong, covering more than 70% of customers in the market. OneDegree Hong Kong also passes on cost savings to customers through its Best Price Guarantee2, offering a fixed premium rate of 0.03% across residential properties of all types to help homeowners save up to 80% in policy premiums every year.

1. New Century Forum’s survey on fire insurance in 2002: https://www.ncforum.org.hk/file/upload/file_392_3Yj.pdf

2. To qualify for OneDegree Hong Kong’s Best Price Guarantee, the fire insurance product must be identical to OneDegree Fire Insurance, such as the product’s coverage, terms and conditions, and cancellation policy. In addition, the price of the product must be visible and available to the public without any membership subscription, promotion code, or any other means of reducing the price or waiving fees.