FAQ: Do you need fire or home insurance, or both?

CNA

3 days ago

SINGAPORE: After a fire ripped through two flats in Toa Payoh on Tuesday (Jul 29), two home owners were left grappling with the loss of their units and belongings.
The owner of the unit where the fire started told CNA that "everything is gone" and that his children now have "nothing".
Of the 1,990 fires the Singapore Civil Defence Force (SCDF) responded to last year, nearly half - 968 - were fires involving residential buildings.
How does a home owner recover financially after a fire? What is covered by insurance - and what type of insurance is needed?
What is fire insurance?
There are two types of insurance home owners can use to cover their homes and belongings - fire insurance and home insurance.
For those with outstanding Housing and Development Board (HDB) or bank loans, fire insurance is compulsory. Home owners buy this with HDB's appointed insurer or with the bank providing the loan.
Owners of HDB flats whose loans start on or after Sep 1, 1994 must buy and then renew their fire insurance plans every five years.
The insurance scheme is meant to help alleviate the financial burden of repair works in case of fires. It covers the cost of reinstating damaged internal structures, fixtures and areas built and provided by HDB.
The premiums are over a five-year term, and the price and coverage varies depending on the type of flat.
For instance, the current five-year premium for a four-room HDB flat is S$4.59 (US$3.55) and insures a sum of up to S$117,000. The premium for a two-room flat is S$1.99 and covers costs of up to S$57,000.
The current insurance provider - from Aug 16, 2024 to Aug 15, 2029 - is Etiqa. The provider for the five years prior was FWD.
Many scenarios are covered under Etiqa's policy, including aircraft damage, smoke damage and malicious damage.
The insurance also covers loss or damage to the insured property caused by a fire in an adjoining property, as well as any loss or damage caused during the operation to extinguish the blaze.
For condominiums, the management corporation is responsible for insuring the buildings and common property for fire damage.
Condominium owners with bank loans will also have to buy fire insurance.
After the loan is fully paid, HDB or condominium home owners are not legally required to maintain fire insurance.
But continuing coverage is "strongly recommended", said Ms Shirley Tan, chief marketing officer of Etiqa Insurance Singapore.
"Home owners should consider the risks as a fire can cause serious financial implications, especially when affordable coverage options are readily available to ensure home owners have peace of mind," she added.
But what fire insurance does not cover is the contents of homes - for example, furniture, clothes or jewellery.
What is home insurance? What does it cover?
Home insurance is different from fire insurance – it is optional and can be purchased from several insurers.
The types of coverage differ across insurers, but they typically cover household items and personal belongings. In most cases, they also cover the cost of renovations after a fire, the removal of debris and other repair costs.
Some insurers cover the cost of alternative accommodation and day-to-day costs, but only up to a certain amount.
People should buy home insurance if they want to cover things in their homes that belong to themselves, said Ms Chen Xueyi, a senior financial consultant with an independently-owned financial adviser.
The type of home insurance coverage also depends on the insurer and policy plan.
According to the General Insurance Association's website, there are normally two types of coverage - insured perils and "all risks".
Regular insured perils include fire, lightning, explosion, bursting of water tanks or pipes, as well as theft by violent or forcible entry.
"All risk" policies offer wider coverage, but can be more expensive.
There are some common exclusions from home insurance, including damage from fungi, wet or dry rot, and losses due to war or terrorism.
How much do home insurance plans cost?
Typically, the higher the sum insured, the higher the premium.
The premiums for home insurance plans typically range from S$50 to S$350 per S$100,000 insured, according to GIA's website.
For example, an owner of a four-room HDB flat will have to pay about S$46 for a one-year plan or about S$117 for a three-year plan for an FWD plan covering S$20,000 of home contents, S$20,000 in home renovations and S$82,000 for building costs.
Bring the coverage up to S$100,000 for home contents and the premiums go up for about S$98 for a year's coverage and about S$250 for three years.
How to make claims?
You should submit your claim as soon as possible. For Etiqa, that is within 30 days.
Most insurers have an online claim form, and may ask for supporting documents, including a repair quotation or invoice, as well as photographs.
After a claim is submitted, the insurer will normally assess the circumstances and decide if a site survey is required.
A loss adjustor may also get in touch with the home owner.
So should you buy home insurance?
Since fire insurance is compulsory as long as you have a mortgage, the bigger question for many home owners is whether you should buy home insurance.
'While fire insurance protects the structure; home insurance protects the contents within. Both are necessary to ensure added protection in the event of an unfortunate fire event,' said Etiqa's Ms Tan.
She added that home insurance is not just a "nice to have but a must have", given that homes are "financial and emotional investments".
"Whether you own an HDB flat, a condominium, or a landed property, and regardless of whether you live in it or lease it out, having home insurance is a practical and important safeguard," she said.
An important thing to note as well is to check your policy exclusions, said financial consultant Ms Chen.
'Fire is a covered event, but sometimes you have to dig a bit deeper into the policy exclusions,' she said.
It is important to make sure that your home insurance covers the reinstatement cost of your content and renovation so you are not underinsured, she said, adding that "very expensive items" at home may require separate insurance coverage.