Most of us tend to take the security of our home and its contents for granted. This means that either we do not have home insurance or, for those who do, the coverage is probably inadequate.
For those looking for suitable home coverage, here are some considerations (the following points are based on Singapore home insurance law):
Risks covered in the home insurance
The fire insurance is basic insurance and covers the building and/or its contents. According to the Singaporean General Insurance Association (GIA), fire insurance generally covers the structure of the building, the permanent fixtures and fittings such as built-in cabinets, baths, toilets, air conditioning units, fitted carpet, parquet flooring and other immovable improvements.
It can extend to cover outbuildings such as garages and perimeter walls. However, foundations and swimming pools are not normally covered by building fire insurance.
Most fire insurance policies cover damage caused by fire, lightning strike, explosion in the home, bursting or overflowing of water tanks (excluding leaks), collisions with road vehicles, aircraft, malicious intent, riot and strike, earthquake, storm and flood, theft or attempted theft accompanied by violence or violent access. Depending on the insurers, other hazards, such as landslides due to storms and floods, may also be included.
Valuing your property
The rule of thumb is that the insured amount is the replacement value of your property, should it be completely destroyed.
To help homeowners estimate the amount insured, GIA’s website www.gia.org.sg provides a guide in the form of a replacement cost table. The latter is based on the gross floor area and the type of buildings for private homes. Property owners should also remember to insure the professional costs and removal of debris/temporary works. One point to highlight is that the bills of these 2 items can be VERY substantial and are normally not covered unless specified in the home insurance policy as most policies will only cover the cost of rebuilding the property.
The principle behind the average clause is that the insurers can reduce the payment on a claim by the percentage that you are underinsured.
So assuming John has a total of $20,000 worth of stuff in his house, but he insured the contents for only $10,000. One night his house was broken into and he lost $5000, of which he filed his claim for the same amount. However, the insurer refused to pay the entire $5,000 claim.
By insuring his contents for only half their proper value, the insurers would only award John half the claim amount, in this case lowering it from $5,000 to $2,500.
Protect your valuables
If you have expensive jewellery, watches or works of art, you are advised to declare it to your insurance company and provide supporting documents such as receipts or appraisal report as insurers insure your valuables as a specific item or as a blanket under a worldwide cover. The latter ensures that even if you lose the insured item abroad, you are still covered.
Common exclusions include war and terrorism risks, nuclear risks, subsidence or landslides. Also excluded are contents such as deeds, bonds, stamps, banknotes, manuscripts, tokens, coins, documents of any kind and willful damage or loss.
If you live in a flood-prone area, some insurers may deny coverage or increase the premium. If your home will be vacant for a long period of time, you can expect insurers to ask how long.
Now that you are equipped with the right knowledge, have fun searching for a home insurance policy in Singapore!