For most Singaporeans, our homes are the most expensive (and arguably most important) purchase we will ever make in their lives. Unfortunately, while we spend lots of time browsing websites like Qanvast for renovation and home furnishing ideas, many of us are not aware about insuring and protecting this most precious asset where cherished memories are created with our loved ones.
Make no mistake about it, risks that threaten one’s home is not all that uncommon: fire, theft, water pipes bursting, and even repossession by creditors. Here are the 3 types of insurance you can use to insure your home.
#1 Fire Insurance
Fire insurance is the most basic and common kind of protection for your home. It is also easily one of the most misunderstood, because of its name. Fire insurance covers a lot of other perils other than fire, including gas pipe explosions, lightning, water pipes bursts, smoke damage, malicious damage, and even riots.
That sounds good right? However, its very important to note that fire insurance only pays for the cost of damage to your home’s structure, including replacement of original fixtures, or rebuilding your home (in the case of landed properties). Examples of original fixtures include original flooring, ceiling, walls, doors, windows, and electrical cabling.
In other words, fire insurance only covers structural damages arising from the above-mentioned perils, but does not cover the contents inside your home like furniture, renovations and personal belongings. For that, you will need the aptly named contents insurance (detailed in #2 below).
If you live in a HDB flat, by default you will be enrolled in the HDB Fire Insurance Scheme, unless you choose to opt out and get your own, more comprehensive fire insurance coverage. For private properties, the basic building structure and common areas are usually covered by a Management Committee of Strata Title Plan. If you own landed property, you would need to get fire insurance on your own.
#2 Home Content Insurance
A home content insurance policy complements fire insurance by covering just about everything inside your house – your renovations and household contents – from unexpected mishaps.
Renovations refer to improvements and additions in the form of fixtures and fittings which you have made to your home like enhanced flooring, built-in wardrobes and air-conditioners.
Household contents includes furniture, appliances, clothing, electronics, jewelry, and more. But note that there is usually a claims limit for the home content items insured, so if you have expensive stuff like Rolexes, expensive wines, or art pieces, you will need to get a separate endorsement in your policy to cover them. Home content insurance also covers your personal legal liability for expenses or property damage you might have accidentally caused.
Home content insurance also provide additional benefits that help you recover from an incident in your home: financial assistance in the form of a stipend and reimbursement for the cost of temporary accommodation and storage while your home undergoes repair.
Home content insurance is not mandatory, but is definitely something to seriously consider having. There are many home content insurance plans with different levels of coverage on the market, so take your time to compare them to find the best one for you. The premiums you pay for home content insurance isn’t determined by the size of your house, but on the sum insured. Pick a sum insured amount that is comparable to the cost of renovation, home contents, and fixtures and fittings in your home.
Regularly Reviewing Your Home Content Insurance Policy
Many things can change in a year or even less. You might have made new home improvements or purchased new appliances. Do review your policy at least annually to add in any new high-dollar purchases or renovations to your policy. Also, if you move to a new home, remember to update your insurer with your new home address and review to see if the sum insured on your current plan is still adequate.
#3 Mortgage Insurance
For most people, their home mortgage is their single largest liability. Not being able to service that loan can have drastic consequences. As your creditor, the bank legally holds your title deed and has the right to sell off your property to recover the mortgage you owe them. Mortgage insurance kicks in if something happens that leaves you unable to repay your home loan. This could be due to a critical illness or if you get retrenched.
With mortgage insurance, you get a lump sum payout for you to continue paying for your home loan. Unless your current insurance policies combined have a sum assured at least higher than your outstanding mortgage, you should definitely look into having mortgage insurance.
HDB dwellers who plan to use their CPF funds to service their home loan must be insured under the CPF Home Protection Scheme (HPS). If you are not using CPF to service the loan for your HDB, you can still choose to be covered under HPS.
Enjoying Peace of Mind for Years to Come
If you haven’t already done so, its a good time to look into ensuring your home is property protected. Having a peace of mind for this precious place we call home is priceless.
Have a specific insurance question that you wish to ask? DollarsAndSense is teaming up with fundMyLife to help get your insurance questions answered – for free. You can get personalised answers from a pool of handpicked, professional advisors. You can find out more about advisors on fundMyLife.
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