Many people know about fire insurance. In fact, it is a compulsory insurance for HDB homeowners, and the premiums can be as low as $1.50 to $7.50 for 5 years depending on the size of your flat. 

As you might guess, with fire insurance, you'll get some form of compensation if your house catches fire. What most people do not realise is that fire insurance only covers structural damages to the buildings. This means that your interior renovation, your expensive furniture and appliances, your precious valuables, and other contents inside the house will not be covered if you lose them to a fire.

What can you do about that? That's where a home insurance plan comes in.

What is home insurance?

Home insurance is a comprehensive insurance plan for your home, and you'll get covered* from major accidents like fire and flooding to minor cases like thefts and faulty appliances. That's to say, it protects the insides of your home, in addition to the property's structure – even down to small precious pieces of jewellery.

What you get on top of fire insurance is the additional Renovation and Content cover for your property. Also, with home insurance, you're protecting your home from more than just fires e.g. thefts, accidental damages to fixed mirrors and glasses, pet cover. 

*There are two types of home policies. An insured peril home policy covers only for specific incidents like fires, while an all-risk home policy covers all types of incidents and hence comes at a higher premium.

Home content coverage

Building

This refers to the structural aspects of your property like the floors, the walls, and pillars. Home insurance covers the cost to reinstate them if they are damaged.

Renovation

Your built-in fixtures and interior renovation could have cost you tens of thousands of dollars, and imagine if they're all damaged by a fire. Fire insurance by itself will not cover for the repair and reinstatement of these fittings; a home insurance plan does.

Content

Content refers to the loose movable items in your home, like the appliances, the furniture, personal belongings and valuables. While there is a limit to how much you're covered per item, and the total amount you can claim on your personal belongings, some form of payout is better than none. Particularly, if you're looking to insure for specific home contents, look out for the maximum you can claim under your Content cover. 

Key coverage of home insurance

  3-Room HDB 4-Room HDB
Annual Premium $44.58 $69.38
Building cover $50,000 $80,000
Renovation cover $40,000 $60,000
Content cover $20,000 $40,000
Alternative accommodation $300 daily, up to $15,000 $300 daily, up to $15,000
Home assistance Up to $100/incident, max 4 times/year Up to $100/incident, max 4 times/year
Theft or damage to contents temporarily
removed
Up to $500/item, max $5,000 Up to $500/item, max $5,000
Accidental damage of fixed mirrors and glasses Up to $1,000 Up to $1,000

As you can see, home insurance covers your home for more than just fire. Of course, you shouldn't expect to get full compensation on your losses, especially if you store plenty of cold hard cash or valuable antiques and paintings at home. What you get instead is a reassurance that you'll get a payout that can help reinstate your home, or to get compensation for temporary accommodations if your house is deemed uninhabitable. 

What other benefits do I get?

Home VS Fire Insurance

One important cover to look at is "personal liability". Say your house catches fire, which spreads and damages your neighbour's property, or if a guest gets injured while staying at your property. If you're found liable, that's where personal liability coverage applies.

Besides covering for loss and damages of valuables, home insurance also covers for the accidental death of your pets (dogs or cats). Pet cover is often an add-on, and it covers you for theft of your pets or pets' injuries inflicted by others.

Different insurers also offer many other benefits like emergency home assistance, cover for professional fees and removal of debris, or even home appliances cover. It really comes down to picking a plan that suits your needs.

How should I choose a home insurance plan?

Start by assessing how valuable your house is and in which area you need most cover. Once you know that, you can find a plan that gives you adequate coverage on your Renovations and Content.  

It is important to insure your property for the right amount. For household contents, this means insuring for the replacement value of the items. For Building and Renovation cover, that would be the total cost to rebuild or reinstate your property to its original state plus the professional fees and removal of debris.

If you under-insure your property and you need to make a claim, the insurers can give a proportionate payout. For example, if the total reinstatement cost for your property is $500,000 and you only get a $250,000 cover, it means that you're 50% under-insured. This means that if you incur $100,000 in repair costs, the insurer is only liable to pay 50% (or $50,000) instead of the full sum.

Nevertheless, there are still home policies with cheaper premiums and adequate cover. These plans tend to give the most barebones of coverage with limited add-on benefits. Should you choose to get a more expensive plan, you can generally expect more comprehensive coverages or it might allow you to claim a higher proportion of your Content cover on valuables and personal belongings.

Yes, Singapore is relatively safe from natural disasters and the crime rate is relatively low. Further, if you stay in a condominium, you should expect some form of security, which you're paying monthly maintenance fees for.

However, many unexpected incidents can still happen at home. Faulty appliances, pests infestations, accidental damage to your fixed mirrors, or burst pipes at home – these are just some situations where home insurance can help.

The cost of home insurance premiums is a fraction of the value of your property. It is only wise to protect your downsides and insure yourself against the costly damages and losses to your home.

 

Compare Home Insurance on GoBear

 

Related articles:

An essential checklist for home insurance

Home insurance - what you need to know

Zhi Han

Zhi Han

He specialises in writing on investing and finance topics and is a long-time supporter of cryptocurrencies.

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