This article was written in collaboration with AXA. All views expressed in the article are the independent opinion of DollarsAndSense.sg
In Singapore, we have a shared belief in striving to buy our own homes. In fact, more than 90% of residents here own their homes. In doing this, we spend a good amount of time researching, designing, renovating and furnishing our home to the best of our abilities. And it is only after we have spent much effort that we can finally move into our dream homes.
At this point, one of the biggest mistakes homeowners can make is not insuring their dream home adequately.
Your Home Is NOT Automatically Insured
For HDB owners who have an existing HDB mortgage loan, it’s compulsory to buy a basic fire insurance policy to cover the internal building structures, fixtures and fittings provided by HDB.
This leads to the misconception among some HDB flat owners that their homes are adequately insured. This is untrue. If a fire, pipe burst, break-in or any other incident occurs, the insurance policy only covers damages to your flat’s internal building structure and/or fixtures and fittings provided by HDB.
What that means is that everything else, including your renovation, furniture, equipment and other possessions, is not insured. Essentially, the dream home that you are currently living in is uninsured. You will have to bear the full cost of any damages sustained in your home, and potentially be liable for any third-party damages caused to your neighbours’ homes, if an unfortunate incident should occur.
For example: If you have a leaking water pipe and this causes damage to the neighbour’s home, this could potentially be a cost you may have to bear.
Home Insurance – An Insurance Policy That Every Home Owner Should Already Have
Aside from life and health insurance, Home Insurance is one insurance type that everyone should get as long as they own a property.
Home Insurance provides protection for your home against common incidents such as fire, flood, pipe burst and break-in. It covers your financial losses as a result of these incidents. Home Insurance complements, rather than replaces, the compulsory HDB fire insurance that you may already have bought for your flat.
Major Benefits Of Home Insurance
To get a better idea of the various benefits that Home Insurance provides, we take a look at the AXA SmartHome Essential to understand how it works.
Source: AXA SmartHome Essential
#1 Fixtures, Fittings & Renovation
Singaporeans can spend at least $50,000 or more to renovate their HDB flat. This includes costs of built-in cabinets and wardrobes, floorings, kitchen fixtures, feature walls, false ceilings as well as electrical works.
If you have spent $50,000 on your home renovation and a fire damages it, then AXA SmartHome Essential (Standard Plan) can provide compensation up to the insured limit of $50,000. Higher tier plans, from Classic to Superior, will provide higher coverage of up to $250,000.
As a rule of thumb, you should ensure that the sum insured should be at least equivalent to how much you spent renovating your HDB flat.
Do note however that in the event of an incident such as a fire, the cost of reinstating your flat back to its original condition may be higher than what it cost you the first time around due to clean-up works, demolition works, additional repair works and even price inflation.
Of course, you will also have other contents such as sofa set, TV, dining table, washing machine and refrigerator in your home, which need replacement if they were damaged in the incident. These items are covered under the “Contents” Section, which pays for loss of or damage to moveable items within your home belonging to you, your family or your domestic helper.
Other types of contents within your home that are also covered include money you keep at home, electronics such as laptops and mobile phones as well any other valuables such as watches, jewellery and musical instruments.
Similar to your home renovation, you should ensure that the sum insured for content within your home is equivalent to the cost of replacing these items that you have.
The sum insured options for the “Contents” benefit range from $15,000 (for a Standard Plan) to $50,000 (for a Superior Plan).
#3 Worldwide Personal Liability
One of the most overlooked areas of insurance is the legal liability that you become liable to pay for if you caused any accidental bodily injury or death to others and/ or their property.
Below is a non-exhaustive list of possible scenarios where you may be liable to pay someone in the event of injury, death or damages to their property.
Fire Which Started From Your Home
Fire, if it does occur, can easily spread from one home to another. If a fire is found to have started from your home, you may be liable to pay for damages sustained by your neighbours if they choose to pursue legal action against you.
Your Pet Attacks Someone
If your pet attacks someone, they have the right to take legal action against you for any injuries sustained. If you are found to be responsible, then you may be liable to pay for damages.
Accidents To Others Within Your Home
If a person gets injured in your home (e.g. ceiling fan falls off and hits someone), you could be liable for any injuries caused.
If incidents such as the ones mentioned above occur and you are found to be liable for any damages, the Worldwide Personal Liability benefit will provide you with the necessary protection.
Do Not Take The Risk Of Not Insuring Your Home
Even though it’s not compulsory, Singaporeans should insure their HDB flats with a Home Insurance policy.
In 2016, the Singapore Civil Defence Force reported a total of 2,818 fire calls occurring in residential premises. Aside from fire incidents, other common dangers to a home include break-ins, pipe burst and flooding, especially for those living on ground level.
While the risk of such perils can be reduced through preventive measures, they may not always be entirely avoidable. Ensuring that your home is sufficiently insured provides an extra layer of protection for you and your family as you safeguard one of your most important assets in life.
Equally important is ensuring that you have the right coverage, and not significantly higher or lower, for your home. You should ensure that your coverage is equivalent to the amount you have spent on your renovation, furnishings and possessions to insure against your financial losses if a fire or any other incidents occurs within your home.
AXA offers a wide range of Home Insurance that caters for various requirements that each homeowner has. The AXA SmartHome Essential offers four levels of coverage, with annual premiums ranging from $53.50 (Standard Plan) to $163.18 (Superior Plan). Furthermore, if you opt for a 3-year plan, you stand to enjoy a 5% discount on your premiums as well as enhanced coverage of 120% of the original sum insured under the Fixtures, Fittings & Renovation, Contents & Worldwide Personal Liability Sections. This basically means that you are paying less for more coverage.
Source: AXA SmartHome Essential
So don’t be caught unprepared. If you don’t already have home insurance, it is something you should definitely consider. With its economical annual premiums catered to a range of budgets, it’s an affordable peace of mind to protect your home and your family.