When I went to the Housing and Development Board (HDB) Hub to collect the keys to my first home, I did so without researching what to expect.
While everything went smoothly, there’s one part where my husband and I made a decision that we had no information and prior knowledge on – buying our home insurance policy.
The staff told us that we needed to buy a compulsory basic fire insurance and asked us whether we wanted to buy another optional insurance to protect our home contents.
What is fire insurance?
She said that HDB’s fire insurance covers the structure and original fixtures provided by the HDB when they are damaged by fire. However, it does not cover your renovations and home contents.
Note: I later found out that fire insurance also covers restoring damaged structure and original fixtures caused by other specific perils, such explosions, lightning, bursting or overflow of water tanks and apparatus, road vehicle and aircraft impact, malicious intent, riots and strikes, earthquakes, windstorms and floods.
For private properties, such as condominiums and apartments, the basic building structure and common areas are usually maintained and covered by the Management Committee of Strata Title Plan (MCST).
At that moment, my first thought was, of course, that we wanted to have coverage on our home contents too! We took up the option offered to us without protest.
But the reality is, there are many home insurance policies out there that we didn’t have the luxury to compare. We made a decision with imperfect information.
If you are getting the keys to your new home soon, I advise you to check out different home insurance policies and not take the decision lightly.
Don’t make a costly mistake
A lot of homeowners have no idea what their fire insurance covers, and some assume that it covers home contents as well. This mistake will cost you when an accident happens.
According to an article by Straits Times in 2016, “the highest claim [AIG Asia Pacific Insurance] has paid out under its Enhanced Public Housing Contents Insurance was about S$90,000 for a fire that occurred because of an electrical fault.”
I don’t know about you, but I sure do not want to fork out that much money as a victim. For about a hundred dollars a year, buying home contents and renovation insurance can give you a peace of mind.
What should your home insurance cover?
1. Building structure and fixtures
If you live in an HDB flat or landed property, you need to purchase a fire insurance to cover possible damage to the building structure and fixtures caused by insured perils.
As mentioned for private properties like condominiums, the MSCT should be responsible for insuring the building. But do double-check to make sure of it.
Some home contents and renovation insurance would offer additional building benefits as well.
Nowadays, it’s normal to spend at least S$20,000 to over S$100,000 on your home renovation. A basic fire insurance will only cover the costs of restoring structural and original fixture damage, nothing else.
You will need to get an insurance that is able to help you restore your home to its former glory in the event of an accident or malicious act.
3. Home contents
We can’t forget about our belongings, can we? Our furniture and household items are vulnerable to water, smoke, impact, and fire damage and our valuables are vulnerable to theft. You should be able to replace or clean them and claim your expenses.
Different insurance policies have different levels of coverage, limits, and caps. Individual items that you may want covered include locks and keys, furniture, electronics, jewellery, art, clothing, money, personal documents, mirrors/glass, and food and drinks.
Yes, if your fridge switches off due to a power trip, causing your groceries to turn bad, your insurance policy may allow you to submit a claim for your losses!
But before you make a claim for low-value items, please ensure that you are not losing your no claim bonus or increasing future insurance premiums, if applicable.
Lastly, our home grows with us and sometimes so does its value.
For example, when you first got a house, you may not have a lot of budget to buy expensive home decor. But who knows, a few years later you may have a collection of expensive art pieces and designer furniture. Would your insurance be enough to cover all that?
Do consider upgrading your insurance plan whenever you decide to add high-value contents in your home.
4. Alternative accommodation
If your home is so badly damaged that you can no longer reside in it, your insurance should be able to cover the expenses of your alternative accommodation for a limited time.
5. Personal accident
This covers the accidental death of you, your spouse, and your children. While you should have a separate insurance policy to cover that, there’s no harm in having more cover from your home insurance.
If you have beloved pets at home and they unfortunately got lost or passed away due to an accident, you may want to be compensated for it. Only some insurance policies cover loss of pets, and some only cover pedigree pets.
7. Personal liability
You would want to be protected when an accident that affects people and property in your vicinity happens. For example, if your water pipes burst and water leaks into your neighbour’s home causing damage, you can cover the costs with your insurance.
When choosing a home insurance policy, you need to consider its affordability and coverage (what it covers and how much). Don’t forget to review your insurance from time to time to ensure that the coverage is enough throughout the years!