(Yicai) Aug. 27 -- Home insurance should be a basic requirement in China, like car insurance, to ensure the proper upkeep of the country’s aging properties, according to an article recently published by the Financial Times, a magazine owned by the People’s Bank of China.

Home insurance, like car insurance, should become a necessity in China, the report said, citing Jiang Difei, vice governor of Hunan province. Housing insurance is a fundamental guarantee for compensation for accidents, and the property insurance system should be based on policy insurance and supplemented by commercial insurance.

Housing insurance will make property inspections a regular and fixed practice as part of risk management duties, said Jiang. This can promote the formation of a housing safety management system that covers the whole life cycle of properties and integrates prevention, discovery and the finding of solutions.

As of the end of 2022, nearly 20 percent of homes in China’s cities were more than 30 years old, meaning that they were nearing the end of their designed lifespan. And the proportion of such homes is increasing. By 2040, nearly 80 percent of housing will be ‘middle-aged or elderly.’

“We should consider establishing housing examinations, housing renovation funds and a housing insurance system to build a long-term mechanism for housing safety management,” Dong Jianguo, vice minister of the Ministry of Housing and Urban-Rural Development, said recently.

It is necessary to improve the standards for housing quality and safety and consider establishing systems of regular housing inspections, housing revamp funds and housing insurance, the State Council, the country’s cabinet, said in a document issued in May 2022.

But the most critical question regarding the roll out of a housing insurance system is who should pay for it. The purchase of home insurance using the value-added income from residential maintenance funds could be possible, industry insiders said. Residential maintenance funds refer to a part of the house purchase cost that is set aside for the maintenance and upgrading of communal areas in residential communities.

Insurers should require policyholders, including property managers and owners, to improve daily maintenance and repair of their properties to reduce risks, said Li Yujia, chief researcher of the Center for Housing Policy Studies at Guangdong Urban & Rural Planning and Design Institute.

Editor: Kim Taylor