It’s no secret that Singaporeans spend a significant amount of our money on property, whether it’s investing in a new condominium or renovating our HDB flat. And in case you didn’t know, we have one of the highest homeownership rates in the world, at 91 per cent.
Yet, many Singaporeans don’t protect their homes with insurance coverage. This is probably because we are not too clued-in when it comes to home insurance despite being proud homeowners – leaving us vulnerable in the long run.
The most common types of risk for Singapore homes include fire or water damage, as well as theft. According to The Straits Times, a 2016 survey by AIG found that water damage accounted for 31 per cent of claims, fire damage for 13 per cent and theft for three per cent.
We decided to take matters into our own hands and share four little-known facts about home insurance that every homeowner should be aware of.
Without a doubt, this little-known fact is one that should be on top of your list. If you are a proud owner of an HDB, you will also be the proud owner of a mandatory fire insurance policy. That’s probably because you were “forced” to sign up for one when taking up an HDB loan. But did you know that HDB fire insurance scheme isn’t a comprehensive home insurance?
As the name suggests, the HDB fire insurance scheme only protects for damages from fire. Plus, it only covers against damages made to the building itself, i.e. the original internal structure (the four walls and pillars) and electrical wiring that come as a part of every HDB. Anything other than these in your HDB unit is not covered by the HDB fire insurance scheme.
Home insurance, on the other hand, offers comprehensive protection against damages beyond fire damages. Water damages (such as leaky ceiling as a result of flooding at your neighbour’s home), floods, earthquakes or hurricanes are all covered by general home insurance. Besides that, home insurance also lets you cover for damages made to the contents in your home. This includes the furniture, appliances and the beautiful artwork you put up on your walls.
In most cases, claiming against your home insurance is pretty simple. However, there are a few situations where it can be a little tricky.
For example, claiming against the personal legal liability coverage is much more restrictive than you think. You need to prove that your family was injured due to an insured event. Plus, you also have to take note that a payout will only be made if there is total and/or permanent disability (TPD) or death.
Another example of a tricky claim is water damage. In Singapore, water damage is the most common claim that is made against home insurance. But not all water damages are claimable. For instance, if the water damage occurred due to wear and tear of old pipes, then you won’t be able to claim against your home insurance. Also, if it occurs while you were repairing a faulty pipe, your home insurer can reject your claim as well.
Did you know that there are a few types of home insurance that are catered to different target audiences? There are specific home insurance policies meant for homeowners, landlords and tenants.
Landlord Insurance: Protects against habitability of your home
Landlord Home Insurance is meant to cover against the risk of maintaining the property. This is keeping in mind that unpredictable expenses may pop up when you are renting or subletting your place. For example, if a previous tenant ends up damaging the rented unit and making it uninhabitable for the next tenant, some renovations will need to be carried out. It can get worse if the tenant skips on his/her rental. This is when this type of insurance helps protect against such risks.
Renters Insurance: Protects contents in your home
As a renter, a break-in, fire, flood or water damage can wipe out the entire set of belongings you own. Nobody, including your landlord, will be there to pay for your losses. That’s why you need your own set of home insurance so that your own belongings can be covered by the insurer in the event of damage.
For homeowner insurance, it is basically a combination of coverage by both landlord and renters insurance. It protects both the habitability of your home (in case of damage) and the contents within your home.
Under-insurance is a very real problem for Singaporeans. From life insurance to health insurance and home insurance, Singaporeans often skip getting ample insurance coverage. The problem of under-insurance is especially for home insurance because you can find yourself being shortchanged.
The reason for that is because home insurance works on an average clause basis. In simple terms, this means that the coverage you receive is less than your replacement cost, i.e. the amount you will need to fully restore your home in the unfortunate event of damage. When under-insurance happens, it means that your claims will be pro-rated, thanks to the average clause.
That is why you should always check to ensure that you have the right home insurance coverage. As your wealth increases, so should your home insurance coverage. You’d rather get the right one than save a few dollars on your plan and end up losing more in the long run.
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Text: Si Jie Lim/SingSaver
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