Home Insurance in Singapore: What is it, Who Offers it, and How to Choose the Right One for You
Home insurance is a type of policy that covers any damage to your property and some legal liabilities that may come as a result of that damage. For example, in some packages, the coverage will handle any injuries to homeowners, visitors, and any damages because of their household pets. As a result, you should consider having home insurance in Singapore if you get regular visitors and if you want to avoid legal responsibility if accidents originating from your household activities may extend to other people.
Most natural disasters can cause damages to your house, but these have to be specified by the policy documents. For example, a typical home insurance policy does not cover damage emanating from floods, earthquakes, or acts of negligence on the homeowner’s part. While shopping for home insurance to protect your household, ensure that the insurance provider provides flood damage insurance if you feel exposed to flood events in your location. Separate clauses can be included in your basic policy, and others removed depending on your needs. It is advisable to approach each policy with deep scrutiny to make sure you only get the best deals.
Types of coverage
A basic home insurance policy should include 3 indispensable areas of coverage. These include:
1. Coverage for the physical structure
Being the most important part of your home, the physical structure leads many people to take home insurance. The insurance plans Singapore provides help you cover the costs needed to repair your home or rebuild it if it is damaged by events like fire, lightning, and structural fatigue. A basic policy covers structures within your compound, even if they are not directly attached to the building. These structures include garages, gazebos, or tower water tanks. One point to note, these structures should have been featured by the time you take the insurance cover. In some rare cases, an insurance company may charge separately for each facility listed in the compound.
The insurable events are most likely to affect the structure of the home more than anything else when they occur. Having the right amount of insurable events in your policy is always a good idea. For example, Singapore is not situated on an earthquake hotspot. Therefore, the top insurance companies in Singapore are likely to offer covers that include hurricanes as an extra risk event instead of earthquakes.
2. Personal belongings
Your personal belongings like furniture, clothes, and entertainment systems are covered in case of loss from fire, theft, and insured disasters. However, many people do not understand that valuing some items is not easy, and anyway, policyholders can only claim between 50 to 70 of their worth. For credibility’s sake, all cases regarding damaged or stolen items still go through thorough investigations to ensure the homeowner does not plan events to gain fraudulently. In addition, policyholders can specify whether they want off-premises coverage so their valuables can still be covered even if they got lost in a different location.
All valid policies have a fixed cash limit beyond which an insurance company will not compensate your luxury items. Purchasing extra insurance riders or regularly appraising property value gives you a better chance of making claims that reasonably match the total item values.
3. Liability protection
In home insurance terms, liability protection offers coverage against lawsuits arising from bodily injury and property damage that inflicts your family or those which your family inflicts on others. In modern times, these policies offer coverage for pets that injure people or damage physical property. However, the liability protection only foots the cost of defending a policyholder in court and court rewards if any. The liability protection is also subject to a pre-determined limit. The good news is that liability protection extends beyond the house location.
Coverage options affecting the replacement cost
There are three coverage configurations, each with different implications on what the insurance company pays for:
1. Actual cash value
The insurance policy allows the insurer to replace the home or lost possessions but deducts a depreciation amount.
2. Replacement cost
This policy allows the insurer to rebuild or pay for the necessary repairs without deducting any depreciation.
3. Extended replacement cost
An extended replacement cost policy ensures that the insurer pays all costs involved in rebuilding the home to the exact standards before an insurable event occurs. Also referred to as the guaranteed replacement cost policy, this type gives the best level of protection. Furthermore, this policy factors increased costs of materials used to build the original house and new construction costs like labor increases. You can count on extended replacement cost policies to offer a wider variety of insurable disasters. However, one disadvantage of this policy is that it cannot include extra costs to match changes in building codes. Additional financial agreements or legal endorsements top up such additional charges.
Choosing the best insurer – Cheap is not always the best
When you already have a list of the likely home insurance providers, do not be quick to settle for the cheapest. Look for the cheapest home insurance plans that provide the most conducive coverage benefits for your budget. Even though they are tempting, some low-price plans usually have some hidden risks involved. Some of the pitfalls include:
- Poor customer service.
- Some have unfairly low limits of insurance protection.
- It is common to find a smaller list of insurable disasters.
Getting the right home insurance coverage can save you from losses that have effects that linger for generations. Knowing crucial details like the coverage policy options and the coverage limits gives you confidence that you are settling for the right package. Understand the legal liabilities involved with owning a home and select reasonable packages that will protect you during those rainy days.