Looking for information on the HDB fire insurance?
Well, you just landed on the right page.
This guide will give you all you need to know and what are your next steps.
You’ll find your answers here.
Some of the areas I’ll cover will be what is it (and what it’s not), the premiums you’ll have to pay and its limitations, etc.
So, read on!
Fires Happen From Time to Time
What happens when you paid a fortune for your HDB flat and some time down the road, there’s a massive fire destroying everything?
If you don’t think that will happen because you’re always careful:
- switching off all electrical appliances when not in used
- paying attention to your cooking (and not get distracted by anything else)
- clearing away fire hazards like a stack of newspapers or flammable items in your home
- repairing or throwing away faulty wiring and appliances
… think twice.
Although doing the above can reduce the common causes of fire in Singapore…
Fires need not be started from you.
It can be from your neighbours – left, right, top, and bottom. You get it.
Let’s take a look at the recent news …
A PMD exploded and the fire destroyed the owner’s flat as well as damaged 2 neighbouring units.
What happens if you were the owner of the neighbouring units?
SIDE NOTE When was the last time you've done proper financial planning or went through a review of your finances? In this day and age in Singapore, doing so will absolutely improve the quality of life for you and your loved ones. Here are 5 reasons why financial planning is so important.
What Is the HDB Fire Insurance?
The purpose of the HDB fire insurance is to protect HDB flat owners against the heavy costs of repair works if a fire happens.
What does it cover?
This particular fire insurance only covers the internal building structure, fittings and fixtures built by HDB. The scope of coverage also includes the surrounding area built and provided by HDB.
So basically, it covers anything that was there before you received your keys (and did anything to your home).
Is it compulsory?
Yes, as long as you have an outstanding HDB mortgage loan.
What Is It Not?
As a homeowner, you must’ve heard about the following (you should learn about them too) and they’re very different to the HDB fire insurance.
Home Protection Scheme (HPS)
The Home Protection Scheme pays out part or the full home loan in the event if the owner(s) suffers death or total and permanent disability. It is a form of mortgage-reducing insurance.
Private Mortgage Insurance
On the other hand, a private mortgage insurance provided by an insurance company is an upgrade to the HPS. But most homeowners would choose to cover themselves with a level term insurance which can be more economical. Both provide lump sum payouts whenever death, total and permanent disability, or critical illness happens.
Home Contents Insurance
Or commonly known as “home insurance“.
It complements the fire insurance because it covers aspects that the HDB fire insurance doesn’t.
More on that later…
DID YOU KNOW? According to a survey conducted by MoneySense, about 3 out of 10 Singapore residents aged 30 to 59 had not started planning for their future financial needs. This isn't surprising because personal finance can seem complicated and daunting. But really, there are only a few things that you should focus on. Learn how to significantly improve your personal finances with the 7-step wedding cake strategy today.
The Premiums for HDB Fire Insurance
Etiqa used to be the sole provider.
But since August 2019, it has been switched to FWD.
It means that all future transactions and renewals have to be done with FWD instead.
Although as a homeowner, it may seem like there’s a lot of miscellaneous items to pay for, this fire insurance is pretty affordable.
Here are the current premiums for HDB Fire Insurance:
|HDB Flat Type||Sum Assured||Premium for 5 years|
|2-Room/ 2-Room Flexi / Studio Apartment||S$48,700||S$2.71|
|5-Room/ S2/ 3-Generation||S$97,300||S$7.13|
As you can see, you just need to pay the premiums (which cover 5 years) for your particular type of flat, and then renew.
To buy or renew, you can visit FWD’s website. Everything can be done online.
4 Limitations of the HDB Fire Insurance
In insurance, the premiums usually reflect the scope of coverage.
If the premiums are low, it usually means that the coverage is correspondingly lower too.
Here are the 4 main limitations:
1) It only covers the home
Which is more important, the home or the homeowner?
Or to put it simply, the cost of the home or the cost of losing the homeowner?
I personally see the homeowner as more important.
If I lose a home, it only represents a monetary cost.
If I’m not in the picture, not only does it represent a monetary cost (family might not be able to pay off the loan), but all other uses of my potential income will be lost. Commitments like kid’s education, retirement and daily expenses, etc, still need to be catered for.
The HDB fire insurance concentrates on the former – the home only.
Whatever happens to the homeowner is not covered. But, that’s why the Home Protection Scheme (HPS) is introduced to protect the homeowners.
2) Covers only fire
Everybody’s talking about fire because it’s a hot topic.
But it isn’t everything.
Singapore is not hit with massive natural disasters and so, the chances of building damage may be lower.
However, there are still other more common “property damages”.
So what happens if a theft or burglary happens?
This fire insurance will not cover.
3) Does not cover damages caused by you
Nobody wants to cause harm to others or their property.
But accidents do happen.
If you’re the unlucky one who was the fire-starter, you may be liable for damages caused to your neighbours or their property.
You wouldn’t want to be in that position but you can’t do anything much with just the fire insurance.
4) Does not cover what’s inside
What makes your home a “home”?
Most Singaporeans spend heavily on the design of the home…
Time and effort to renovate the house…
Buying furniture and appliances to make it comfortable.
After a day’s work, the home is one of the simple joys and you’re proud of it.
Well, these home contents are all not covered, and that can amount to a huge chunk of change if something happens.
What If I Want More?
With the limitations of the HDB fire insurance, what can you do then?
The simple option is to look for a home contents insurance. It will be able to complement and cover what’s not covered, providing the best of both worlds.
It’s still affordable and will give you a greater peace of mind that your home will always be sweet.