5 Types of Property Insurance You Will Need
You have just spent your life savings on your first home, but have you taken any measures to protect it?Many Singaporeans assume that HDB’s Housing Protection Scheme is all they really need to protect their precious homes!
Thus, to clarify your doubts, here are 5 types of insurance you’ll need to protect your home.
1. Mortgage Insurance
Mortgage insurance covers the loan of your house so that your dependents don’t have to pay for the outstanding loan in the event of your death, terminal illness and total permanent disability.
If you take up a HDB loan, the Housing Protection Scheme (HPS) offered by HDB is a type of mortgage reducing insurance.
You have to be insured under HPS if you are using CPF savings to pay your monthly loan instalments on your HDB flat. HPS is not offered to executive condominiums and private properties.
If you take up a bank loan, a bank will offer you a Mortgage Reducing Term Insurance (MRTA).
How does it work?
For example, if you pass away, contract terminal illness or suffer from total permanent disability, the insured sum will be paid straight to the financial institution or HDB to offset/ pay off your outstanding loan.
2. Buildings Insurance
A common type of buildings insurance is fire insurance.
According to Etiqa Insurance, more than 2 in 3 fires happen at home caused by rubbish and unattended cooking!
Fire Insurance covers any damage to the property caused by fire, lightning, explosion of gas used for lighting or domestic purposes.
HDB’s Fire Insurance Scheme is a compulsory insurance for every HDB homeowner who takes up a HDB loan.
This 5 years term policy is issued by Etiqa Insurance Pte Ltd, appointed by HDB.
This policy only covers the cost of restoring damaged areas built and provided by HDB, excluding renovation and household contents.
It covers the cost of reinstating or repairing the damaged internal areas of the flat built by HDB due to the following:
- Aircraft damage;
- Bursting and overflowing of water pipe, water apparatus or water tank;
- Smoke damage;
- Vehicle impact damage;
- Riot and strike;
- Malicious damage;
- Landslide and subsidence;
- Spontaneous combustion; and
- Sprinkler leakage.
The sum insured and premiums are standard and fixed according to the apartment type and pre-determined by HDB.
This policy is only available only to HDB apartments.
If you own a condominium or private apartment and if they have been registered as a Management Corporation Strata Title (MCST), it is the responsibility of the Management Corporation to insure the building for damage due to fire.
If you own a landed property, you can take up fire insurance from any provider.
3. Contents Insurance
This covers the household contents of the buildings only.
Household contents generally refers to all moveable items such as your television.
Almost all items that are contained in your house will be insured.
This policy is useful for those who already have some form of buildings insurance, and wish to insure only their household contents as they are not protected under fire insurance.
4. Buildings and Contents Combined Insurance
(Packaged Household Insurance)
Packaged Household Insurance covers 2 main areas, buildings and contents. It may also cover other additional benefits like personal accident and medical expenses.
The buildings portion covers structural damage to the building due to fire and other perils, which includes renovations and additions. This is different from the HDB Fire Insurance Scheme which does not provide cover for improvements.
Common perils include:
- Fire, Lightning, Thunderbolt
- Aircraft and Other Aerial Devices Dropped
- Collision or Impact
- Bursting or Overflowing of Domestic Water Tank, Apparatus or Pipe
- Theft Accompanied by Actual Forcible and Violent Entry or Exit
- Hurricane, Cyclone, Typhoon, Windstorm and Flood
- Earthquake or Volcanic Eruption
- Riot, Strike and Malicious Act
The basis of settlement will be the cost of reinstatement of the property destroyed or damaged. This means that the insurer will pay for the:
- Rebuilding of the insured’s house if it is destroyed; or
- The repair of the damage and restoration of the damaged portion to its original condition if the building is damaged.
5. Valuable Articles Insurance
This type of insurance covers your valuables such as your collection of antiques, paintings, sculptures and any such items of high monetary value while they are at specific locations or anywhere in the world.
You can choose to select itemised coverage or blanket coverage or a combination of the two.
If you choose itemised coverage, each insured article will be specifically listed in the policy and insured for an agreed amount.
The insurer will pay the sum insured for that article or pay up to the market value of the item.
If you choose a blanket coverage, you can simply select a total or blanket amount of coverage for each category of articles, such as jewellery, furs or fine arts.
Blanket coverage will be more appropriate when insuring many items of less substantial value.
The insurer will pay the amount required to repair or replace the property, whichever is less.
You can choose to cover very high value items, while the remaining less substantial value items are insured using the blanket coverage.
Now that you have gained a clearer understanding of the different types of property insurance, please seek advice from a trusted General Insurer and take the necessary actions to insure your house!
Ignorance is a really expensive price to pay.