Here’s what home owners, landlords, tenants, and pet owners, need home contents insurance for
House fires have dominated news headlines over the past few months, with many caused by Personal Mobility Devices (PMDs) being left to charge while unattended.
In 2018, there were 3885 fire incidents, according to SCDF statistics. Of that, 74 of them were caused by PMDs. In contrast, just 49 such cases were seen in 2017. This statistic is alarming as it comes on the back of declining numbers of residential fires in recent years.
The apparent surge in PMD related fires has had a sobering effect on many Singapore residents, and highlighted the urgent need for better fire protection. That includes the installation of smoke and heat detectors, fire extinguishers, and the purchase of home contents insurance.
Relooking home contents insurance
Home contents insurance coverage is sorely lacking in Singapore, largely due to misconceptions, indifference, and a lack of understanding of its benefits.
Many HDB dwellers assume that the fire insurance they purchased along with their flat is sufficient in the case of a fire. That could not be farther from the truth.
The mandatory HDB fire insurance merely covers the repair of the exterior and interior structure of the home in the case of a fire, while all of the renovations, furniture and belongings are not. That means, if your home is completely destroyed in a fire, you would have to replace everything out of pocket.
“If you have already invested a lot into your home renovations, then that is something you need to protect,” says Alfred Chia, the CEO of financial advisory firm SingCapital and a firm believer of home contents insurance.
Besides providing reimbursement for the repairs of your home and the value of your belongings, home contents insurance can also cover the cost of your alternative accommodation while your home is being repaired. If your home contents insurance covers your licensed pet, your insurer would even cover the cost of your pet’s alternative accommodation.
Understanding home contents insurance coverage
As Chia explains, there are two types of home contents insurance coverage. A standard coverage only insures for fires and damage by insured perils including an earthquake, lightning, smoke damage, theft, or riots.
An “all risk” coverage provides coverage for fire, insured peril and almost any damage that is caused by an accident.
As an example, Chia mentioned an incident when his son knocked over a brand new LED television while trying to close a window, causing the television screen to crack. He was quoted $800 for the repair of the television. “I had just bought that television less than a month ago for $900, and it was like asking me to buy a new television,” Chia said. “But because I bought “all-risk” coverage, my home contents insurance covered it. If I bought standard risk coverage, I would not have been able to claim for the television repair.”
Even the repairs of laptops damaged by spills can be claimed under an “all-risk” home contents insurance policy, though Chia cautions that mobile phones are not covered and require their own dedicated policy.
According to Chia, premiums for home contents insurance start from just $100 a year. While “all-risk” home contents insurance policies command higher premiums than standard coverage policies, the difference is just $20 to $30 in absolute terms.
An essential insurance policy for homeowners, landlords and tenants
While it may be clear why homeowners and landlords should protect their property with home contents insurance, it remains equally essential for tenants to protect their own belongings in a home that is not their own.
“A lot of tenants neglect to think about this,” said Chia, highlighting tenants who move into a rental home with their own furniture to make the place feel like their own.
To try and educate tenants, Chia is working closely with real estate agencies and their agents to support and provide the right advice to tenants and landlords for all of their rental transactions.
Claiming from home contents insurance for pet owners and home owners
Margaret Moh, an advisor with SingCapital, often helps her clients with their claims, but never expected herself to become a claimant. But as luck would have it, she became a claimant of her home contents insurance thrice.
In the first incident, a burst water pipe in a common bathroom resulted in flooding in her master bedroom and guest bedroom. Her home contents insurance covered the $1000 bill to repair her laminate flooring in both rooms.
When another water pipe in her master bathroom burst, she managed to contain the damage quickly and her home contents insurance covered the $600 repair cost for the water pipe.
The third incident arose when she was out walking her dogs within her estate. Her usually well-behaved dog bit her close neighbour on the thigh, causing her to bleed. Moh advised her neighbour to seek medical attention immediately and promised to reimburse her medical bills.
The neighbour needed two visits to a general practitioner and another to a specialist at the Singapore General Hospital to make a full recovery.
“I was not even thinking about insurance at that point, I just told her to give me all her medical bills so I could reimburse her for them,” Moh explained. “It was only afterward that I realised my home contents insurance covers pets and third party liabilities. So my insurer paid for my neighbour’s $600 medical bill.”
As a comparison, Moh pays $160 in annual premiums for her home contents insurance policy.
Understanding the importance of the excess clause
When looking for a home contents insurance policy, Moh points out that consumers need to look at the excess clause for each type of claim.
The excess is how much the insured has to pay out of pocket before they claim for the remaining amount from their insurer.
Moh explained that in the case of the flooding in her condominium home, she could have claimed from the insurance of her Management Committee of Strata Title Plan or MCST. However, as there was an excess of $5,000 from that insurance policy and none from her own home contents insurance, she opted for her own insurer knowing that her claims would be far less than $5,000.
“You should always look at the excess clause,” Moh cautions.
So what can’t you claim from a “all-risk” home contents insurance policy?
“Damages caused by wear and tear are not covered,” Moh says.
In fact, Chia points out that home contents insurance coverage can be very comprehensive, up to its policy limits. Though, he advises homeowners who have a lot of valuable items like Rolex watches, diamond jewellery, or expensive paintings in their home to seek out higher end insurance policies that would cover them.
“Even when a husband and wife has a fight, and the wife throws a vase that misses him and hits the tv or wall, your home contents insurance will cover it,” Chia says jokingly. “But I wouldn’t advise anyone to try and change their tv in that manner.”