This article is written in partnership with OCBC. Views expressed are the independent opinion of DollarsAndSense.sg
Many in Singapore aspire to live in a condominium with luxurious amenities including a swimming pool, tennis courts, private security and many other facilities. However, owning a private condominium isn’t cheap, with 3-bedroom condominium apartments usually selling for at least S$1 million or more. On top of that, there is also the additional cost of renovating and furnishing the apartment, which makes the cost of ownership higher than the actual purchase price of the condominium.
Having spent so much money on a property, one of the biggest mistakes owners can make is not having adequate insurance to protect their property.
Isn’t My Condominium Already Insured?
Most owners assume the Management Corporation (MC) would have insured their condominiums. They are (partially) right. The MC will purchase insurance coverage for the common areas, buildings and the original fixtures provided by the developer.
In the unfortunate event that a fire, or any other incident, occurs, the cost of reinstating the buildings back to its original condition would be covered by this insurance policy.
Absence Of Insurance Coverage In Your Home
The gap in the insurance coverage provided by MC for your apartment lies in the renovation works and any content within your home (e.g. furniture).
What this means is that if you spent S$50,000 renovating your home, and another S$25,000 on your furniture, you would be facing a hefty loss in the event a fire destroys everything in your home. This applies even if the fire did not originate from your home, and wasn’t your fault.
How Much Insurance Do I Need?
At this point, a reasonable question to ask would be how much insurance coverage should one insures a condominium for.
The simple answer to this question is, how much risk are you willing to bear?
Imagine if you spent S$70,000 on your renovation, and another S$30,000 furnishing your apartment. Are you willing to accept the risk that you may lose all that money in the event of a fire? Or do you want to protect yourself against such a risk?
If the answer is yes, you should ensure that your coverage is at least the same amount on what you have spent on your home.
Also, most people don’t consider that in the event a fire destroys your renovations and furniture, the losses they sustain may go well beyond just the cost of replacing your renovation and furnishing. Here are some additional costs homeowners may incur.
Loss of money: Any money kept at home
Valuable Items: Valuables such as jewellery, watches and artwork
Alternative Accommodations: If your home is destroyed, reinstatement and renovation works will take time to complete. You may incur additional cost to stay at an alternative accommodation in the interim period.
Another important thing to note is that if your home has been damaged, the cost of reinstating it to its original condition or replacing your lost renovation works and furniture may be even more costly the second time around. This might be due to additional works to remove damaged works, cleaning as well as price inflation. Hence, property owners should not assume that insuring their home to the sum of their renovation and furnishing costs is always going to be enough. To be on the safe side, homeowners may want to consider insuring for an amount that is slightly more than the cost of their renovation and furnishing.
Other Risks That We Cannot Ignore
While fire is the most obvious risk for most homeowners, it’s certainly not the only one.
Aside from fires, other incidents that could leave your home damaged include flooding, particularly if you stay on the ground floor as well as if there are bursting or overflowing of water tanks and pipes. Depending on the extent of the flooding, this can also cause you significant losses if your furniture, electrical appliances and flooring get damaged.
Even in Singapore, the risk of burglary is always present, even if you are staying within a gated compound. In such incidents, losses could include money, jewellery and other valuables you keep at home.
Buy Adequate Insurance For Your Home
The rationale behind why you should buy home contents insurance is fairly simple. Having spent so much on buying your dream condominium, and even more on renovating and furnishing it, it will be wise to protect it with sufficient insurance.
Home content insurance isn’t expensive, especially when compared to how much you’ve already spent on your home.
One such home contents insurance policy in the market that you can consider is GreatHome home contents insurance distributed by OCBC Bank. This policy is meant to protect valuable contents within your home against incidents such as fire, bursting of pipe, burglary and other incidents which may result in financial losses for you and your family. It complements, rather than substitutes, any existing fire insurance that may have already been bought to insure the building.
Homeowners can choose from three different levels of coverage. At its most basic level, the Starter Plan (S$128 per year, before discount) provides coverage for up to S$75,000 on renovation and home content. The GreatHome Essential Plan (S$188 per year, before discount) provides coverage of up to S$150,000 while its most comprehensive plan; the Ultimate Plan (S$268 per year, before discount), provides coverage of up to S$250,000.
This table highlights the premiums you pay, against the coverage you receive.
|Coverage Level||Annual Premiums||First Year Premiums With Discount (Valid Till 31 December 2018)|
|GreatHome Starter 1-year Plan||S$75,000||S$128||S$98|
|GreatHome Essential 1-year Plan||S$150,000||S$188||S$138|
|GreatHome Ultimate 1-year Plan||S$250,000||S$268||S$208|
Source: GreatHome, OCBC
Do note that there are sub-limit claims within certain categories. For example, even though coverage level for the Starter Plan is S$75,000, you can only claim a maximum of S$11,250 each for the following two categories: alternative accommodations, works of art, jewellery and valuables, as well as up to S$1,000 on loss of money.
If you wish to purchase the policy, you can complete an online enquiry form on the OCBC website.
Do you already have a question on home content insurance policy? If you wish to discuss your questions with us, comment on our Facebook Page.
From now till 31 December 2018, OCBC is offering a promotion where you can save up to S$60 on GreatHome insurance plans. You can find out more here.
GreatHome is underwritten by Great Eastern General Insurance Limited, a wholly-owned subsidiary of Great Eastern Holdings Limited and member of the OCBC Group. GreatHome is not a bank deposit or obligation of, or guaranteed by OCBC Bank.
Policy Owners’ Protection Scheme
This plan is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the General Insurance Association (GIA) or SDIC websites (www.gia.org.sg or www.sdic.org.sg).