With the spate of recent fire incidents in Singapore recently, are you sure you’re adequately protected by HDB fire insurance? To get top of it, every Housing Development Board (HDB) homeowner and tenant should consider home insurance as an essential purchase.. While the mandatory HDB fire insurance covers only the building structure of your apartment, home insurance protects your personal belongings, renovation, furniture, etc. Want to make the best decisions when choosing home insurance for your HDB unit? Let’s have a look at five home insurance mistakes to avoid.
1. Confusing home insurance for fire insurance and/or mortgage insurance
What are the differences between “home insurance”, “fire insurance”, and “mortgage insurance”? At first glance, these concepts may sound alike but actually provide very different benefits to homeowners and their occupants.
Home insurance provides you financial protection for damages or losses related to the contents of your home, such as your personal belongings and furniture. Should your house be so badly damaged that you need restoration works and temporary accommodation, home insurance is able to provide you payouts for these.
Fire insurance covers the cost of reinstating damaged internal structures, fixtures, as well as areas built and provided by HDB. It does not include home contents such as furniture, renovation and personal belongings such as your electronic devices or valuables. All homeowners with HDB loans must buy and renew their HDB fire insurance every 5 years. (Read more about what your HDB fire insurance does not cover.)
Mortgage insurance offers a payout that can be used to pay off any outstanding housing loans should anything untoward happen to homeowners.
2. Skipping it entirely
Now that you have a better idea on what is home insurance, do not be tempted to skip it! The truth is accidents in your home can happen anytime and anywhere. And even if you can minimise the risks at home, your HDB flat could still be endangered by your immediate neighbours’ actions.
Did you know that according to the SCDF, unattended cooking fires form the largest component of fires in residential flats? There are so many reasons why a person living in your block could step away from their kitchen whilst cooking, and these are beyond our control. The second top cause of fires in residential buildings are discarded items and household contents, which are commonly spotted at HDB staircase landings and void decks.
Even if you can eventually claim damages from the party at fault, the process will likely take months. Having your own home insurance allows you to rebuild your home more quickly and with more certainty. Plus, if you sign up with Tiq Home Insurance by Etiqa, you will also benefit from extra support such as emergency cash allowance and emergency home repair services.
Give yourself the peace of mind by ensuring that you have purchased home insurance before red fire engines with blaring sirens ever pull up to your carpark.
3. Not having enough home insurance coverage (underinsuring)
Buying insufficient home insurance will subsequently only provide you with partial coverage of your claims. For example, if you underinsure your property by 50%, it is common practice for insurers to pro-rate your claims payout accordingly.
To illustrate broadly with numbers: let’s say you purchase home insurance with sum insured of $90,000. An accident happens, and the total cost of replacing the damages is $150,000. Seeing that you have underinsured your home, the insurer will calculate your share of insurance by taking the difference between the full replacement cost and the amount that you’re insured for (in this case, $150,000 – $90,000) and dividing it by the full replacement cost ($150,000). The resulting percentage of 40% is what you are liable for.
In other words, your insurer will only provide you with payouts for 60% of your claims, and the remaining 40% cost of replacing the damages will have to come out of your own pocket.
Hence to avoid further despair after your home has been damaged, it’s very important to get enough coverage from the very beginning.
4. Not reviewing your home insurance coverage periodically
Related to the previous point on underinsuring, sometimes this happens because your home insurance has not kept up with the changing value of your home. Our recommendation is to review your home insurance annually or when there are major works done around the house, so that the amount of coverage is up to date.
Some of the common reasons why home values fluctuate include changes in property values, home improvements and renovation, increase in personal belongings, lifestyle changes, and rental of home.
Check out our guide for more useful information: 5 Reasons to Review Your Home Insurance.
5. Neglecting policy exclusions
When buying insurance, it’s always a good idea to understand what the product will cover and what it will not, so that you won’t get a rude surprise when making claims. Home insurance is no exception.
For instance, if you purchase 3- or 5-year plans with Tiq Home Insurance by Etiqa, we will cover the costs of pest control services if your house is infested with bees, wasps, hornets, and termites. However, it will not cover these services made within the first three months of home insurance coverage, and excludes recurring termite infestation.
Another common area of policy exclusion is damage to furniture or belongings due to fungi, wet or dry rot, or bacteria.
And if your personal belongings were damaged or stolen by anyone in your household or your guests , these usually won’t be covered by home insurance either.
Conclusion on top home insurance mistakes
Home insurance mistakes are made when homeowners try to cut corners or remain unclear about their policies. But in the event of a calamity, these decisions could leave them feeling even more distressed. So make sure that you avoid these costly mistakes when insuring your home.
Did you know that Tiq Home Insurance starts from as low as S$28 for a customisable 1-year plan? Enjoy flexible and comprehensive coverage options with Tiq by Etiqa Insurance, where you can insure renovation for up to S$1,000,000 and your home contents for up to S$150,000! With Tiq Home Insurance, if your house becomes uninhabitable, get emergency cash allowance to cover your necessities and alternative accommodation while you focus on keeping your family safe and well.
Customers who purchase home insurance plans of 3 years or more will also have exclusive access to our 24/7 emergency home assistance service (EHA) for four common emergencies: plumbing, electricity, locksmith, and pest control issues. Find out more about Tiq Home Insurance and get an instant quotation today.
Information is accurate as at 13 June 2022. This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K). Protected up to specified limits by SDIC.
Tiq by Etiqa Insurance Pte. Ltd.
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