Most of us tend to take the safety of our home and its contents for granted. This means that we either do not have home insurance or, for those who do, the cover is likely to be inadequate.
For those shopping for a suitable home cover, here are some considerations (the following points are based on home insurance law in Singapore):
Risks covered in home insurance
Fire insurance is a basic protection cover and it covers the building and/or its contents. According to Singapore’s General Insurance Association (GIA), fire insurance generally covers the building structure, the permanent fixtures and fittings such as built-in cabinets, baths, toilets, air-conditioning units, fixed carpet, parquet flooring and other immovable improvements.
It may extend to cover outbuildings such as garages and perimeter walls. However foundations and swimming pools are normally not covered under fire insurance for buildings.
Most fire insurance provides cover against damage caused by fire, lightning, domestic explosion, bursting or overflowing of water tanks (excluding leakages), road vehicle impact, aircraft impact, malicious intent, riot and strike, earthquake, windstorm and flood, theft or attempted theft accompanied by forcible or violent entry. Depending on insurers, other perils such as landslides due to windstorm and flood may also be included.
Valuing your property
The rule of thumb is that the sum insured be the replacement cost of your property, should it be completely destroyed.
To help homeowners estimate the sum 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 development for private residential homes. Property owners should also remember to insure for the professional fees and removal of debris/temporary works. A point to be highlighted 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 only cover the cost of rebuilding the property.
The principle behind the average clause is that the insurers can reduce payment on a claim by the percentage you are under insured.
So assuming John has a total of $20000 worth of items in his house but he insured the contents for only $10000. His house was burgled one evening and he lost $5000, of which he submitted his claim for the same amount. However the insurer refused to pay the full claim of $5000.
By insuring his contents for only half the correct value, the insurers would award John only half of the claim amount, in this case reducing it from $5000 to $2500.
Protecting your valuables
If you have expensive jewellery, watches or art pieces, you are advised to declare them to your insurance firm and provide documentary proof like receipts or valuation report, as insurers will insure your valuables either as a specific item or as a blanket under a worldwide cover. The latter ensures that even if you were to lose the insured item overseas, you will still be covered.
Common exclusions include war and terrorism risks, nuclear risks, subsidence or landslip. Also excluded are contents such as deeds, bonds, stamps, bank notes, manuscripts, medals, coins, documents of any kind and deliberate damage or loss.
If you are living in a flood prone area, some insurers may decline cover or increase the premium. If your property is going to be vacant for long periods of time, expect insurers to ask how long.
Now that you are equipped with the appropriate knowledge, happy home insurance hunting in Singapore!