Home insurance - what you need to know
Home insurance is something a lot of Singaporeans take for granted.
You really shouldn't though because damage to the home is the archetypal “black swan” event: an unlikely event, but one that can have permanent and devastating consequences.
Due to the significant downsides, and low cost of insurance, it’s best to be as protected as possible:
Types of home insurance in Singapore
There are three main types of home insurance in Singapore. These are:
- Basic fire insurance
- Home content insurance
- Mortgage Reducing Term Assurance
These insurance policies generally do not overlap. For example, home content insurance has nothing to do with your mortgage, and vice versa.
Basic fire insurance
Basic fire insurance is mandatory for HDB flats, but not necessarily for private property. Fire insurance usually covers the cost of repairs to the structure and fixtures of your home, and little else.
For example, if your house were to burn down, fire insurance would pay out for the cost of rebuilding your home. But it would not give you a pay out for all your lost furniture or damaged appliances; nor would it give you a pay out for services such as debris clearance.
There may be some exceptions, but they are not the norm. For HDB owners, the default insurer for your home's fire insurance is from Etiqa. The premiums for most flats range between $4.50 to $7.50 per month, and policies must be renewed every five years. HDB does change the insurer from time to time, but you can see the latest information on their webpage.
For owners of non-landed private homes, basic fire insurance is the responsibility of the Management Corporation Strata Title (MCST). The Management Corporation will insure the entire property, and handle the claims in the event of a fire. Owners will have to check with their individual Management Corporations on who their fire insurer is, or how much the premiums cost.
It’s important to note that renovations to your property may not be covered by the MCST fire insurance. If so, it’s up to you to buy your own fire insurance. Check with your MCST on the nature of the policy.
For landed properties, it’s up to owners whether they want to buy fire insurance. It is, however, a very good idea, given the high value of a landed home. In addition, note that if you have a mortgage on the property, the bank will usually require you to buy fire insurance.
Home content insurance
As the name implies, home content insurance protects what you keep inside your home, rather than the home itself. At the most basic level, this type of policy covers items such as furniture, cash, jewellery, and appliances such as air-conditioners and fridges.
Most home content insurance goes further than that. For example, some home content insurance also provides pay-outs for:
- Third party liability - if your neighbour sues you because a fire in your house damaged theirs, you can make a claim from the insurer.
- Daily allowance - if you need a place to stay after a house fire, some home content policies will provide a daily allowance to mitigate the costs.
- Storage costs - if you need to store your surviving furniture or equipment after a fire, home content insurance might cover the costs.
- Debris clearance - many home content insurance policies cover the cost of removing debris in the aftermath of a fire.
These are just some of the features you can find. Insurers often try to differentiate their home content insurance, so you can always find some policies with unusual features; some even give you free consultations for home loan refinancing, or special discounts on home maintenance from select companies.
Note, however, that home content insurance usually has a maximum payout of $2,500 for a single item, and a cap of $5,000 (two items) on things such as cash and jewellery. It’s not a good idea to keep more than this amount of cash or jewellery in your home, so do use the bank even if you have home content insurance.
In addition, most policies do not allow claims if your house has been unoccupied for more than 14 days. If you need to go on a long trip (e.g. a month or more), talk to your insurance agent for specialised options.
Mortgage Reducing Term Assurance
For HDB owners, this is covered under the HDB Home Protection Scheme.
For private property owners, Mortgage Reducing Term Assurance (MRTA) is an optional form of home insurance, which deals specifically with your mortgage. In the event of your death or permanent disability, MRTA pays out the remainder of your existing home loan. This is important because your family may not be able to keep servicing the mortgage upon losing your income due to your passing.
MRTA premiums can be paid from your CPF Ordinary Account (CPF OA) and are paid yearly. Premiums vary, so do compare between existing policies for the lowest cost.
Note that MRTA premiums are not paid for the entirety of your loan tenure. Most policies will be fully paid by the time you’re three-quarters of the way through your loan tenure. For example, by the 20th year of your 25-year loan tenure, your MRTA is probably fully paid-up, and you won’t need to make premium payments for the last five years.
Singaporean home owners should have all three forms of home insurance
Your house is probably the most expensive thing you will ever buy, and it may be your legacy to your children. It pays to protect it with all of the above insurance schemes, not just basic fire insurance.