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Fire Insurance: What Is It and Why Should You Get It?

As a Singaporean, your house is probably the most expensive thing you will buy. As a homeowner, securing your home and its contents from fire and unexpected disasters should be of the utmost importance.

While many know about insuring their homes, some neglect to purchase fire insurance as it is not compulsory. In this piece, we will delve into what exactly fire insurance is, how coverage differs depending on property types, how much (little!) it costs for homeowners and if it is sufficient to protect you from unexpected disasters.

What’s the deal with fire insurance?

Think you have it all covered and an unsupervised fire would not happen at home?

According to the Singapore Civil Defence Force (SCDF), they received a total of 1,877 fire calls in 2020 out of which 1,054 were residential-related fire calls. The common causes of residential fires are unattended cooking, discarded items, and electric origins.

Fire insurance, as the name suggests, provides coverage for damages made to the building structure and fittings, including floorings, walls, and electrical wirings, due to fire-related incidents. It can be bought by anyone who is a legal owner of a residential landed property or an apartment.

While not mandatory, homeowners with HDB loans commencing on or after 1 September 1994 must buy and renew the HDB fire insurance for their homes, for as long as they have an outstanding HDB loan.

Fire insurance vs home insurance

According to HDB, the current appointed insurer for the HDB Fire Insurance Scheme is FWD Singapore Pte Ltd. The insurance is valid for a 5-year period and renewal is done once every 5 years. Even though fire and home insurance may seem the same, there are some key differences between these two.

Insurance typesWhat it coversPrice (5-year)
HDB Fire InsuranceBuilding structure, fixtures, and fittings provided by the HDB or its approved developers
S$5.99
(S$82,000 coverage for a 4-room flat)
Comprehensive Home Insurance (including HDB Fire Insurance)Building structure, fixtures, and fittings, renovation costs, and home contents
S$305.40
(S$40,000 coverage for home renovations and S$40,000 for home contents)

(Price derived from FWD Insurance)

It is evident that the HDB fire insurance is way more affordable at its low premium of S$5.99 for a five-year policy for 4-room flats.  There is no reason for a homeowner not to get HDB fire insurance, even if you have already repaid your HDB loan or mortgage.

Credit: HDB

However, do note that the HDB Fire insurance only covers fire damage to building structures, fixtures, and fittings provided by the HDB or its approved developers. Homeowners are only allowed to file a claim for the costs incurred in restoring the flat’s physical structures and fixtures to their original condition. The HDB fire insurance will not cover any renovation costs or home contents such as your furniture, TV, and personal belongings.

On the other hand, home insurance offers a broader range of coverage that can include home contents loss, renovation damage, alternative accommodation expenses and cost of storing home contents, any incidental expenses, any legal liability and home assistance services.

Read more: How Home Insurance Keeps You Protected Against Fire, Floods and Worse

Private property’s fire insurance

If you stay in a condominium, it is likely that the condominium has been registered as a Management Corporation Strata Title (MCST) property. In this case, the legal responsibility to insure the entire property for fire damage lies in your Management Corporation’s hands. Should the property be damaged due to a fire, the Management Corporation would be the ones to claim from this insurance policy.

However, the renovation costs and loss of home content due to fire damage are not covered under fire insurance. To ensure that you are adequately protected, it is necessary for you to source for a comprehensive home insurance policy.

Some of the available home insurance policies for condominium owners include:

 
Income Enhanced Home Insurance
MSIG Enhanced HomePlus
Plan NameN.A.UltimateSuperior
Renovation$100,000$150,000$115,000
Contents$50,000$120,000$80,000
Worldwide Personal Liability
(part of policy coverage)
$500,000$1,000,000$1,000,000
Premium (incl 8% GST) (1 Year)$136.30$188.35$142.56
Premium (incl 8% GST) (3 Years)$347.55N.A.N.A.

At S$136.30 annually, condominium homeowners can insure their houses for S$100,000 in renovation costs, S$50,000 for home contents, and S$500,000 in personal liability under the Income Enhanced Home Insurance policy. This policy extends a 15% discount to those who take up the 3-year version of the home insurance.

MSIG Enhanced HomePlus Superior plan offers S$115,000 in renovation costs, S$80,000 for home contents, and S$1,000,000 in personal liability at a slightly higher rate of S$142,56 annually.

Landed property owners and apartment owners without strata titles can decide on their own if they wish to purchase fire insurance for their property.

In Conclusion…

For HDB homeowners, protecting possibly your most expensive asset against unforeseen incidents at the price of a McDonald’s meal should be a no-brainer. Supercharging the protection with a comprehensive home insurance plan that further extends protection over your home contents will ensure peace of mind, especially when disasters can strike when you least expect them.

Make sure you compare and customise the home insurance policy so it suits what you need, and ensure you have enough coverage for renovations and replacement of home contents. Check carefully to understand what is covered before committing to a plan.

Read more: Home and Fire Insurance Compared

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