Owning a property comes with a long to-do list, and home insurance is one of the easier things to put off.
You’ve probably heard of it, but maybe never got round to sorting it out. Today, we’re covering everything you need to know about home insurance in Singapore.
Let’s get into it.
But First, What Is Fire Insurance?
Before we get into home insurance, it helps to understand fire insurance, since it’s the base that most home insurance policies build on.
Fire insurance primarily covers the internal building structures, fittings, and fixtures. It’s designed to protect homeowners from the high costs of repair works in the event of a fire.
The coverage scope can vary depending on the type of property you own.
SIDE NOTE
A policy bought years ago. Savings in three places. A will that's still on the to-do list.
None of it is wrong. It's just not a plan yet.
There's an order that turns the pieces into one system, and it doesn't require becoming a finance expert. Here's the order, in 7 steps, so you know what to sort out first.
For HDBs
For HDB owners with an outstanding mortgage loan, fire insurance is compulsory. The premiums are relatively low, costing around $5.43 for a 5-room flat over 5 years. However, the coverage is limited to what was built by HDB, not anything you’ve added.
For Condominiums
The situation differs for condo owners. If your property is under a Management Corporation Strata Title (MCST), the management is responsible for insuring the entire property. If the building is damaged, the management can file a claim to restore it.
One catch worth knowing: the MCST’s fire policy may not cover the renovations and improvements you’ve made inside your own unit. It’s worth checking what your MCST’s policy actually includes, and insuring your own renovations separately if they’re not covered.
For Landed Properties
For landed properties or apartments without a strata title, purchasing fire insurance is optional. However, just because it’s not required doesn’t mean you shouldn’t consider it, as fires can still occur.
The Difference Between Fire and Home Insurance
Fire insurance covers the structural aspects of the property, like repairs to the building if damaged by fire. However, it doesn’t cover everything else.
Items like your renovations, appliances, and personal belongings are not covered under fire insurance, which can result in significant financial loss. This is where home insurance, or home contents insurance, comes in.
QUICK CHECK
Can you answer these three questions?
1) If something happened to you tomorrow, how much would your family receive?
2) At 65, what monthly income will your savings and investments pay you?
3) If you never get round to a will, who inherits what, and in what proportion?
Most people manage one at best. Not because they're careless, but because nobody has shown them which order to tackle things in.
That order exists. Work through your finances in this sequence, from income and protection through to investments and estate planning.
Home Insurance Is Not the Same as Mortgage Insurance
While home insurance and mortgage insurance are related, they serve different purposes. Home insurance protects the property itself, while mortgage insurance (like the Home Protection Scheme for HDB owners or private mortgage insurance) covers the homeowner.
Mortgage insurance makes sure the home loan is still repaid in case of death, terminal illness, or total and permanent disability, and private plans can also include critical illness cover. Covering yourself matters just as much as covering the property, because these events can be financially devastating for the family left behind.
The Two Types of Home Contents Insurance
Home insurance policies can differ significantly. Here are the two main types:
Insured Peril: These policies cover only the specific risks listed in the policy documents. For example, if fire is the only covered peril, the insurance company will only pay out if the damage is caused by fire.
All-Risk: These policies offer broader coverage, extending to everything except what’s explicitly excluded in the policy. Naturally, all-risk policies tend to be more expensive than those that cover insured perils only.
What Does Home Insurance Cover?
Although the specifics vary by provider, most home insurance policies cover the following common areas:
Fixtures, Fittings, and Renovations: Fire insurance typically covers the structure of the building, but not the items you’ve added, such as renovations, fixtures, and fittings. These can be covered under home insurance.
Home Contents: The contents of your home (furniture, appliances, and electronics) can add up to a considerable sum. If they’re damaged in a fire, replacing them can be costly. Home insurance provides a payout to help with these expenses.
Personal Items: Depending on your policy, personal items like money, credit cards, and important documents may be covered. There are usually caps on how much you can claim per item, but it’s still worth having.
Alternative Accommodation Costs: If your home is damaged and becomes uninhabitable, home insurance can help cover the costs of alternative accommodation, so you won’t have to worry about finding a place to stay during repairs.
Personal Legal Liability: If you’re responsible for damaging someone else’s property (e.g., if a fire spreads to your neighbour’s flat), you could be liable for the damages. Home insurance can help mitigate this financial risk.
Other Coverage: Some policies offer additional coverage, such as for the death of pets, breakages, or other specific events.
Who Should Get Home Insurance?
- Homeowners: If you own and live in your property, everything inside it is on you. Home insurance is what stops a disaster like a fire from turning into a financial one.
- Landlords: For those who buy properties to rent out, home insurance is equally important. Landlords need coverage not only for the property but also for the potential loss of rental income if the property is damaged. Make sure this coverage is included in the policy.
- Tenants (Renters): If you rent a property, especially if it’s unfurnished, you may have invested in furniture and appliances. These items won’t be covered by the landlord’s insurance, so it’s wise to get home insurance to protect your belongings.
Whichever group you’re in, home insurance is one small piece of planning around the property you own, alongside protecting the mortgage and, eventually, deciding how the home is passed on.
Finding the Best Home Insurance in Singapore
Singapore’s home insurance market is competitive, with many insurers offering coverage on core areas. Home insurance is generally affordable compared to other types of insurance. As a guide, the General Insurance Association puts premiums at $50 to $350 per $100,000 of coverage, depending on how comprehensive the policy is. So you should be able to find a suitable policy without too much difficulty.
However, if you have specific needs, such as coverage for pets, rental properties, or high-value items, it’s important to pay close attention to the details of the policy to ensure it meets your requirements.
BEFORE YOU GO
Articles can tell you what generally makes sense. They can't see your policies, your CPF, or your plans.
FullCircle is our comprehensive financial planning session. A licensed consultant goes through what you have, shows you the gaps and overlaps, and tells you what to prioritise across protection, retirement, and estate planning.
It's complimentary, takes about 45 minutes, and if nothing needs changing, we'll say so.