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If you are on your way to collecting the keys to your spanking new BTO flat soon, congratulations! In your excitement, you could have overlooked a few essentials, such as insurance.
“I already know I have to buy the HDB fire insurance that is mandatory on my HDB loan,” we hear you say. It’s great that you know this, but the HDB fire insurance scheme is the most basic form of insurance and is not enough protection for your home.
If you thought it was enough, don’t worry, you’re not the only one. In fact, it is such a common misconception that most insurance companies include it under the FAQs on their website. So what is the difference between fire insurance and home insurance, and what else do you need?
All homeowners who have an existing HDB loan are required to have mandatory fire insurance for their homes. After the loan is paid off, they can choose to continue the coverage or cancel it.
This insurance covers the cost of repairing damage caused only to fittings and the core structures such as walls and flooring that have been provided by HDB or an HDB-approved developer.
However, fire insurance doesn’t take into account several other factors that may be important from a homeowner’s point of view, such as:
Let’s take a look at these factors and how to choose the insurance provider that offers the best coverage for you.
Home contents, as the name suggests, refers to any item present in your home. This can include furniture, appliances, personal belongings, and any renovation work that you have undertaken in your home.
Home contents coverage can also include some unique features such as insurance for frozen goods. If you have food items that get spoilt due to power failure, fluctuations in temperature or other issues, you may be able to make a claim for them against your home insurance.
This coverage also protects you against losses caused due to natural disasters such as flooding and fires, as well as against incidents such as theft.
Insurance policies that offer personal liability coverage protect you in the eventuality that an accident befalls anyone while inside your home. It can also provide coverage against any damage caused by your pet’s mischief.
In addition, personal liability can help you pay for any third-party claims. For example, if there is damage to your neighbour’s property due to leakage caused by a burst water pipe in your house, you can use your home insurance to pay for it.
In some extreme instances, the natural or man-made disasters described above may make your home unliveable. When that happens, your home insurance would be able to take care of rent for alternative accommodation for the duration.
If your pet gets injured, or in case of its unfortunate death due to any of the above-mentioned incidents in your house, your home insurance would be able to provide some coverage. Depending on your policy, you can get coverage in one or more of the following situations – theft, injury or accidental death of your pet.
So how do you select the best home insurance? The short answer is, you should find one that offers the best protection for the above factors based on your priorities.
Let’s take home contents as an example. If you don’t have possessions which are extremely valuable, such as jewellery and expensive artworks, you may not need high coverage for your home contents.
FWD’s home insurance may be a good choice in this situation, since it offers low premiums (at least 30% less than industry standards) with high coverage, but the individual sublimit for items such as jewellery and artworks is only S$1,000.
Aviva’s home insurance (sublimit of S$1,500 per item) and AXA’s SmartHome (up to S$7,000 per item for “valuables” or S$10,000 in total for artworks) policies, on the other hand, provide higher protection for such items.
When it comes to food items, insurance companies would typically honour a claim in case you were away and may not do so if you were at home when the incident occurred. So if you travel for work frequently and for long periods, getting coverage for frozen foods may be a good option for you. Etiqa’s ePROTECT home (up to S$500) and AXA’s SmartHome (up to S$750) are options you may consider.
If you are someone who rarely makes an insurance claim, then consider AXA’s SmartHome as it provides a “No Claims” discount. If you don’t make any claims for 3 consecutive years, you get a 10% premium discount in your 4th year.
These are just some considerations for buying home insurance. It is always advisable to compare and contrast different policies before selecting one that best matches your needs.
This article is part of our home series. Subscribe to Asia Finance’s weekly e-newsletter to stay updated on articles related to smart personal finance management.