You might be tempted to think that because Singapore is relatively robbery-free and sheltered from natural disasters like earthquakes and typhoons, you can save by scrimping on home insurance.
All that depends on a couple of factors such as a) if you own the house you’re staying in, b) how much valuables you keep in the house and c) frankly, just how unlucky you can be.
In July 2019 alone, at least three fires – all linked to personal mobility devices (PMDs) – have led to death, injuries, and ravaged homes in heartland areas all across Singapore.
In 2017, there were 49 fires involving PMDs, according to stats released by the Singapore Civil Defence Force (SCDF) earlier this year. This number spiked by more than 50 per cent to 74 in 2018.
In 2017 alone, there were 3,871 calls to the SCDF fire department.
Now, you might think, “Hey, I don’t own a PMD so no problem.” But do you know if your next door neighbour has one? What about your neighbour below or above your floor? The point is, you never know, so it is always better to be prepared.
We’ve compiled some tips to help you decide if you should buy home insurance, as well as how to decide which is the best home insurance plan for you.
Factors to consider when purchasing home insurance
Q1: Are you an owner-occupier, tenant, or landlord?
Owner-occupier: If you currently reside in a place you own, you should seriously consider getting a home insurance plan which covers your belongings, renovations, payout for emergency interim accommodation, medical expenses or your precious pet.
Next, you have to decide if you require an “Insured peril” or “All risks” policy. An “Insured peril” policy will cover your home against risks such as fire, flood, or housebreaking (all the named perils in your policy wording), while an “All risks” policy will offer protection against a whole wide range of risks such as earthquakes, tornadoes, and hurricanes (unless that peril is specifically excluded in the policy wording).
In Singapore, the latter is pretty low so we most would opt for an “Insured peril” coverage. However, an “All risks” policy is recommended because it will cover accidental loss and/or damage of all your home contents (barring exceptions).
For example, if you tripped and fell on your television causing it to fall and break, an “All risks” policy will cover you. An “Insured peril” policy will only cover a television falling and breaking if that fall was caused by a fire, flood, or plane dropping out of the sky.
Tenant: If you are renting a home that is well-furnished, your landlord will most likely have bought home insurance, so it’s not necessary for you to get one. However, if you are a tenant renting a home that is unfurnished, then you will be the one who has to pay for the cost of the home contents. In this case, it’s wise to get a home insurance plan to protect your belongings and against other perils such as fire or theft.
If you are a student renting a room, co-sharing with other roommates, then you probably would not need to buy home insurance as your landlord would likely have purchased one.
Landlord: As much as you hope your tenants will be responsible enough to take good care of your home and items like the refrigerator, washing machine, sofa, bed, microwave oven and air-con, there’s a chance that your belongings may be damaged due to carelessness. On top of that, you can also enjoy protection from personal liability should your tenant(s) decide to sue you for injuries sustained caused by objects or electrical appliances in your property.
Q2: What is the value of your home’s content?
Gone are the days when our grandparents or great-grandparents stashed away valuables in Milo tins and hid them under the bed. While most of us deposit money in banks and no longer hold large sums of cash at home today, contents in our home are actually worth a lot. It may not hit you at first because some of the valuables may have accumulated over time but expensive watches, laptops, smartphones, desktops, home entertainment systems, furniture, carpets, crockery and kitchen appliances can really add up.
Value of content for the average household in Singapore
How do we go about estimating the rough cost of home contents in an average household in Singapore.
What exactly constitutes an “average” household? We go by the average number of people staying under one roof (HDB, condominium, landed property) in Singapore – a family with two kids. Of course, there are also a sizeable number of singles who live alone, as well as families with many kids living with their grandparents.
For the sake of deriving an ‘estimated’ cost of home contents, we’ll stick to four people living in a household as a point of reference.
Value comparisons based on two tiers
We will also do our comparison based on people who shop purely for practical purposes (basic tier), like a cheap sofa set good enough for sitting, to someone who’s willing to splurge (high-end tier) on an imported designer leather sofa from Italy.
These comparisons will not be restricted to where they live as again, there may be people who live in HDB flats who can afford to spend a fortune on a sofa set while there may also be people who live in condominiums who are happy with just a decent sofa bought from IKEA.
We did a basic stock-take of the average value of the usual contents you can find in a home:
|Estd value (Basic)||Estd value (High)|
|Furniture||Sofa, dining table set, bed frames, mattresses, wardrobe, kitchen cabinets, cupboards, study||$4,000||$25,000|
TV, sound/AV system, washing machine, microwave, refrigerator, air-con system, lights
|Kitchen and crockery||Pots, pans, wok, cutlery, plates, bowls, glassware, dishwasher, cooking stove, cups and saucers||$200||$2,000|
|Mobile devices, entertainment|
Desktop PC, laptop, tablets, smartphones, printer, camera, headphones, game console, CD/DVDs
|Bathroom & sanitary appliances||Mirror, water heater, shower, bathtub, toilet bowl, basin||$2,000||$10,000|
|Walls, window, flooring||Doors, gates, wallpaper, window panes & grills, flooring (marble, tiles, parquet)||$10,000||$30,000*|
|Clothing, shoes& linen||Clothes, linen, mattress, bedsheet, pillow, sneakers, dress shoes, sports shoes.||$1,000||$8,000|
|Jewellery & accessories||Jewellery, watches, sunglasses, scarf, shawl, handbags, wallet, purse||$2,000||$20,000*|
|Personal documents, cash||Education certificates, passport, NRIC, birth certificate, marriage certificate, will, photos, credit cards, cash||Priceless|
|Pedigree pet(s)||AVA approved pets (dog, cat, fish, bird etc)||Priceless|
|Antiques and collections||Antiques, stamp, coins, paintings, sculptures, artwork, wine, liquor||Priceless|
What types of coverage will you need?
Next, you will need to decide on how much coverage you need. As you shop around for various home insurance plans offered by different companies, you will most likely find that most of them offer the following coverage:
Home Contents: Includes the usual items found at home: furniture, electrical appliances, crockery and utensils, clothes, jewellery, personal devices such as laptops, desktops, tablets, mobile phones etc.
Fixtures and Fittings: Renovations and fittings in the house such as walls, ceilings, built-in wardrobes, floor coverings, pipes, toilet bowls, washbasins etc.
Damage to the House: Refers to damage done to the physical structure of the house.
Loss of personal documents, cards money and valuables: Covers personal documents such as passport, birth certificates, identity card, credit cards, driving license, education certificates etc. You can also get covered for your money in cash and valuables such as Rolex watches. However, the payout is capped at a certain amount and it varies from policy to policy.
Interim accommodation: If your home is rendered uninhabitable as a result of let’s say a fire, you will need to find interim accommodation while waiting for it to be fixed. The payout is usually capped at a certain amount and for a certain period of time.
Compensation for you, your family and/or domestic helper: In the event of an accident, you can get compensation for medical expenses incurred for you and your family members and domestic helper (live in).
Pets: Some policies will cover the loss of a pet, usually dogs and cats (sometimes limited to certain breeds or pedigree). It can also be purchased separately, like an optional add-on.
Personal liability: This covers you against personal legal liability in the event someone is injured in your home or due to a mistake or accident that you have caused. It also covers property damages due to negligence. For example, you will be covered if your PMD catches fire, which spreads and causes damage to a neighbour’s property.
Why Fire Insurance is not enough
It is easy to conflate fire insurance with home insurance. Basically, fire insurance covers the cost of repairing the ‘internal structures, fixtures and areas built and provided by the HDB’ due to damages caused by fire, smoke and water.
The contents in your home such as furniture, renovations and personal belongings are excluded from coverage. Hence, getting home insurance will provide you with much more comprehensive coverage. Now, the exact coverage depends on the policy and provider you choose. If you have a precious pedigree dog or exotic Persian cat, you need to choose a policy which provides such coverage or as an add-on.
While Singapore is generally a safe country with a low crime rate, it does not mean that there is no crime. House break-ins, though declining, do still take place.
With many home insurance plans priced affordably which also allows you to pay via credit cards, it is wise to start doing some math now.
How do you choose a home insurance policy?
Remember: the best plan is not the cheapest, but the most comprehensive one which meets your needs.
That said, you need to think about what your priorities are. You will also need to calculate the cost of your home contents and renovations in order to help you choose the amount of coverage you desire.
You must also be careful not to under-insure your assets. Insurance companies expect the coverage to match the value of your properties. Do not under-estimate the implications of doing so.
For instance, if the coverage is $30,000 on the value of your total covered assets which is $60,000, you are under-insuring your home by 50%. Hence, if you file for a claim for a loss of $10,000, you will only get $5,000 – half of its actual monetary worth.
Once you know how much your home should be insured for, the next step is to find the best home insurance that suits your needs. One way to decide which policy has a better payout is to do a simple calculation.
Should you find a policy which you like but it does not cover all your needs, you can opt for an add-on. Some insurance companies allow flexibility in customising your insurance plan.
Do keep a lookout for incentives such as discounts on policies if you sign up for a longer duration, that is, five years instead of one year. Sometimes, certain credit cards also offer a special rate if you pay for the insurance plan using a card issued by a specific bank.
It is also advisable to review your coverage as and when necessary. For instance, if you have just spent $80,000 renovating your home or if you have installed a home bar with an expensive collection of wine and whiskey or a home movie theatre system, you might want to upgrade your existing tier of coverage to protect your new assets.
Read these next:
Using Blockchain To Simplify Insurance Claims for Bereaved Families
How To Do Financial Planning When You’re A Single Woman
Food Poisoning: Does Your Insurance Cover It?
Avoid These 5 Mistakes When Buying Insurance
5 Things Singaporeans Should Know About End-of-Life Planning