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Home insurance: do I need it and how much do I need?

Your home, whether a HDB, condominium or landed property, will likely be your most important asset. Not only is it a place where you will spend a large portion of your life, but it also contains all of your prized possessions. Moreover, Singapore ranks as one of the most expensive residential property markets worldwide.

While Singapore has one of the lowest crime rates in the world and is relatively safe from natural disasters such as earthquakes and typhoons, there are other factors that might damage your home, like flash floods and home fires.

Take 2019 for example, the overall number of fire incidents increased by 7.8%, with an increase in fires involving personal mobility devices (PMDs). You might not personally own a PMD but you’ll never know if your neighbour living beside, below or above you owns one.

In short, it’s always better to be safe than sorry. Which then begs the question, how much home insurance do you actually need?

Value of your household content

A home is not complete without its furnishings and embellishments. Each person’s prized possessions differ – from watches to cameras, paintings to sneakers, bags to wine etc.

Additionally, some people would get furniture purely for practical purposes, while others would be willing to spend on imported designer ones.

Thus, it is important to do a stock-take on all of your home contents to get a more accurate value that you are looking at.

What types of coverage will you need?

Once you have listed down your items and their average value, the next step is to decide on how much coverage you need. Most home insurance plans offer the following coverage:

Home Contents: furniture, electrical appliances, crockery and utensils, clothes, jewellery, personal devices such as laptops, desktops, tablets, mobile phones etc.

Fixtures and Fittings: renovations and fittings in the house such as walls, ceilings, built-in wardrobes, floor coverings, pipes, toilet bowls, washbasins etc.

Damage to the house: refers to damage done to the physical structure of the house.

Loss of personal documents, cards, money and valuables: covers personal documents such as passport, birth certificates, identity card, credit cards, driving license, education certificates etc. You can also get covered for your money in cash and valuables such as Rolex watches. However, the payout is capped at a fixed amount that varies from policy to policy.

Interim accommodation: if your home is rendered uninhabitable as a result of let’s say a fire, you will need to find interim accommodation while waiting for it to be fixed. The payout is usually capped at a certain amount, for a fixed period of time.

Compensation for members of household: in the event of an accident, you can get compensation for medical expenses incurred for you and your family members and domestic helper (live-in).

Pets: some policies will cover the loss of a pet, usually dogs and cats (sometimes limited to certain breeds or pedigree). It can also be purchased separately, like an optional add-on.

Personal liability: this covers you against personal legal liability in the event someone is injured in your home or due to a mistake or accident that you have caused. It also covers property damages due to negligence. For example, you will be covered if your PMD catches fire, which spreads and causes damage to a neighbour’s property.

Why fire insurance is not enough

Many people mistake fire insurance with home insurance. Basically, fire insurance covers the cost of repairing the ‘internal structures, fixtures and areas built and provided by the HDB’ due to damages caused by fire, smoke and water.

The contents in your home such as furniture, renovations and personal belongings are excluded from coverage. Hence, getting home insurance will provide you with much more comprehensive coverage.

See more: HDB Fire Insurance vs Home Insurance – What’s the Difference?

Conclusion

The best plan is not necessarily the cheapest, but the most comprehensive one which meets your personal needs.

With that said, you need to think about what your priorities are. You will also need to calculate the cost of your home contents and renovations in order to help you choose the amount of coverage you desire.

It is also advisable to review your coverage from time to time. For instance, if you have just spent $50,000 renovating your home or if you have installed a home bar with an expensive range of wines and whiskies or started a luxury watch collection, you might want to upgrade your existing tier of coverage to protect your new assets.

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