A four-alarm fire that broke out in an under-construction Hong Kong hotel could lead to the city’s largest-ever property related insurance payout in a single case, an expert claimed. The four-alarm fire burned the Kimpton Hotel, an Empire Group property in Tsim Sha Tsui, on Thursday.
According to Chan Kin-por, a representative for the insurance industry in Hong Kong’s legislature, the claim for the Kimpton Hotel fire could range from HK$200 million (US$25 million) to as much as HK$500 million (US$64 million). The sky-high costs are because the 42-storey hotel was already 90% completed, which entitles the property to a high level of compensation.
If and once completed, the resulting payout will be among the highest in Hong Kong history, if not the highest. It will be paid under a category of insurance called “contractors’ all risks” insurance, Kin-por said.
“Usually, contractor-risk coverage only pays out at about HK$20 million or so,” Kin-por said in a report from the SCMP. “The compensation amount will be high because the building is almost completed, as the amount will pay to rebuild the completed part. The later the damage occurs during the construction period, the higher the sum that will need to be paid.”
According to several insurers, Charter Ping An of Hong Kong may be the insurer of the Kimpton, although the firm has declined to confirm or deny these claims. The site for the hotel is a redevelopment of the former Mariners’ club into a 42-storey, 500-room hotel, which was expected to open next year.
Kin-por noted that the claim may reach its highest level if the Kimpton building will need to be demolished and rebuilt as a result of the fire. Even if only repairs are needed in the end, the claim could still reach up to HK$200 million.
Hong Kong Federation of Insurers CEO Selina Lau Pui-ling said that developers who have bought all-risks contractor insurance can seek claims from the insurer in case of any damage to the materials of under-construction buildings due to fire, typhoon, or other reasons. The guild represents 138 insurance companies in Hong Kong.
The insurance cover also includes third-party claims during the construction period until the project’s completion, including the loss or damage of nearby buildings due to fire. The Kimpton blaze also threatened the nearby buildings of the five-star Sheraton Hotel and Hermes House.
The report also noted that despite Kin-por’s claims that the Kimpton fire may result in the city’s highest ever payout, no data is available to support this at the moment.
Ping An and fellow Asian insurer Taiping have unveiled their separate one-policy motor insurance coverage for Hong Kong and Greater Bay Area in anticipation of a cross-border traffic surge under an upcoming travel scheme.
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