Following our article on the insurance for co-working space user, we are now exploring the business insurance co-working space operators in Hong Kong need.
1 – Liability insurance
One of the main fundamentals of the co-working space business are the members of the space. They interact with each other; they bring their own equipment into the space and they use the different amenities offered by the operator. But more importantly they are expecting to be in a safe and sound environment that allows them to work efficiently.
As a co-working space operator, you must buy a public liability insurance to cover the material damage or bodily injuries your member may suffer because of your negligence. It could be a member who slips on a wet floor or it could be a material damage cause to the equipment belonging to the member.
While you are purchasing the public liability insurance, we advise you to check in parallel the request of your landlord in term of insurance. As a common practice, rental agreements in Hong Kong include a clause whereby the tenant is requested to buy a tenant’s liability insurance up to a certain amount (usually 20,000,000 HKD). The tenant’s liability insurance is in general included in the public liability, but you must ensure that the limit insured is up to the limit requested.
Finally, as a Hong Kong registered company with employees, you must buy the employers liability insurance which is mandatory by law.
2 – Business specific coverage
Everyone agrees to say that there is high potential for growth in the co-working industry. Some added values services such as in-house catering, events or conferences, dedicated services for IT or for specific corporate needs are being developed. All these services will be considered by your insurer as to go beyond a co-working space activity so make sure to inform your insurance intermediary in order to get the proper coverage as extension of your current policy or as a separate policy.
3 – Property damages
Majority of co-working space operators in Hong Kong (if not all) enters into a rental agreement with the building owners. Then, they invest into the space to make it as attractive as possible for the future members. The investment include architect and designer fees, fitting, furniture, office and IT equipment. In the end, the investment is certainly not negligeable and this is important to set up the appropriate property damage insurance to protect it in case of loss.
Among other, we strongly advise to
- Declare the new replacement value of your assets
- Declare any specific items or work of art for which the value could be above a certain level (10,000 HKD)
- Buy an equipment breakdown insurance extension for your IT equipment
- Check that the designer and architects’ fees are at the right level
The property damages side of the insurance is not what make the insurance expensive so dont be afraid to be large in the declaration of the value rather than be conservative. The annual rate of the property insurance would be between 0,12% and 0,25% depending on the age of the building the protection and the scope of cover. If you are investing 5,000,000 HKD in your co-working space, the annual insurance premium will be between HKD 6,000 and HKD 12,500 per year for the property insurance.
4 – Loss of rent insurance
Loss of rent insurance is part of the business interruption insurance. It will greatly help the co-working space operator to mitigate the financial burden of a loss.
In the event of your co-working space becoming unfit for occupation following its destruction, the co-working space operator could buy a loss of rent insurance whereby the insurance will indemnify the rent payable during a certain period of time after the event.
The loss of rent insurance will be triggered only following a physical event hitting your premises.
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