How to Protect Your Dream House with Home Insurance
Home insurance protects your home, its contents, and renovations.
Consider this scenario:
You have just moved into your new home. After spending ten of thousands of renovation costs, and additional few thousands on the fixtures/furnishing and various electrical appliances, you are satisfied on how your dream home looks.
Given that housing is one of the most valuable asset Singaporeans can own, it makes perfect sense to protect it. A simple fire could wipe out all your renovation and furnishings. The cost to revert the damage could be financially devastating.
In this article, we will show you why your house is most likely not protected, and what you can do to ensure a minimal, comfortable protection for your house.
Purpose of Home Insurance
Home insurance protects not only your house but also the renovations, fixtures, and furniture within it. Protecting your renovations and furniture means protecting the lifestyle that you have already gotten used to.
The purpose of home insurance is to protect what fire insurance excluded from their policy.
Is Home Fire Insurance Protection Sufficient?
You might have heard of fire insurance.
It is usually mandatory when you take up mortgages for your house. However, fire insurance is often not sufficient in protecting your home.
This is because fire insurance only covers structural damages to your house’s interior and the original fixtures. Original fixtures include the original flooring, ceilings, walls, doors, windows and electrical cabling. Your furniture, electronic gadgets, electrical appliances, and further renovations are not covered by your fire insurance.
There are 2,898 fire incidents occurred in residential premises in 2015. The below chart shows the top five types of fire incidents that occurred.
Source: Singapore Civil Defence Force
Can you imagine if one of these cases happen in your house?
The fire could have wiped out everything, including your furnishings and renovations that you have spent tens of thousands on previously. Fire insurance can only cover the cost to revert the house back to the original state.
Would you bear seeing all the money spent on the furniture and renovations gone down to waste?
Also, fire insurance does not cover certain risk events, for example, theft.
In 2015, there are more than 300 cases of housebreaking-related crimes reported. If you keep valuables like jewelry or expensive equipment in your house, you will not be able to claim the loss of these items in the event of theft with fire insurance.
Coverages of Home Insurance
Most home protection insurance provides the following coverages:
Building cover: Damages to your premises caused by fire or other defined events;
Contents cover: Accidental loss or damage to your contents in the premises, temporarily removed from the premises, or personal effects anywhere in Singapore;
Family liability: Amounts you and your family are legally liable to pay as compensation for bodily injury and property damage occurring within Singapore;
Family personal accident: Covers when you and your family members against death or permanent disability as a result of accidental injury (Note); and
Other benefits such as alternative accommodations, removal of debris, fire extinguishing expenses, food, and pet dog.
The sum insured and the limits of the coverage depend on the policy and how much premiums you are going to pay.
Note: We do not recommend using home insurance as a substitute for personal accident insurance.
Keeping Track of Your Home Inventory
If you are going to buy home insurance, we recommend you to keep a home inventory list. A home inventory list keeps track of your home contents. In the event where there is a fire or theft, insurance companies will be able to process your claims faster due to proper documentation.
Even if you are not buying home insurance, a home inventory also allows you to keep track of which items are stolen or damaged a fire or theft occurred.
In the ideal scenario, home inventory list should include the following information:
The item in your home
Where is it placed
Make / Model
Serial Number / ID Number
Date of Purchase
Where or which retailer did you buy the item from
Additional notes about the item (name and contact information of the appraiser, if relevant)
Photo of the item
Scanned copy or photograph of the receipt
But I believe most of you who are reading this probably would not keep track of this information. Nevertheless, by having an exhaustive list of your home inventories itself is already a good starting point.
You do not require sophisticated software to keep track of your home inventories. In fact, you can start with using a spreadsheet program like Microsoft Excel. We also provide you with a template, together with some common household items that you can include in your home inventory list.
Here are some tips for preparing your home inventory list:
Use your smartphone or digital camera to take photos of the receipt whenever you buy a household item. If you are like me, it is easy for you to lose your receipts after buying the item. Taking a photo of your receipt the moment you pay for your household item is a way to ensure you keep track of it. This is especially important for the big ticket items. One useful app is the CamScanner App, which will flatten the image of your receipts.
Schedule a time regularly (once every two weeks or a month) to update your home inventory list. Once you have done up the initial home inventory list, schedule a regular time to update the list so that you will not be overwhelmed.
Take photos of the items that you own. Together with the receipts, this can act as a proof of ownership of the items to the insurance company.
Backup your home inventory list, together with the receipts and photos of your item using cloud storage services like Dropbox or Google Drive. In the event of fire or theft, you might lose your phone or your laptop which you keep the files. Keeping it in the cloud make it retrievable even when your hardware is lost.
Preparing a home inventory list can be overwhelming. But it is critical to protecting your home contents. The good news is you can get a head start by downloading our home inventory list checklist and template.
Considerations when Buying Home Insurance
Protect Your House with Other Measures
The best risk management strategy is always prevention. Afterall, you wouldn’t want to go through the hassle of filing insurance claims, and purchasing the household items all over again.
Here are some ways to protect your house:
Have a fire extinguisher in your house. Do check on the expiry date every 6 months.
Install smoke detectors in your house.
Use your common sense. If you are not using the fire from cooking, turn them off. Also, do not throw cigarettes that are not extinguished into the rubbish chute.
Keep all your valuables (jewellry, cash, etc.) in someplace secure, preferably in a safe.
Install a good alarm system. An alarm system will scare off most burglars.
Ensure that you lock your door and windows every night before sleeping. Make it a habit of doing a round check. If you stay on the ground floor, this is even more important.
Avoid having expensive items that are exposed to the public, for e.g. an expensive car. You do not want to let everyone know that you are rich.
If you have a security system, make sure you remove the sticker or the branding. Experienced burglars will know how to disarm the security system by their brands.
If you love pets, get a dog that will bark. It is usually good enough to scare off burglars.
If you are traveling for an extended period, do not broadcast in social media that you are going for a family trip.
Evaluate how much coverage you will need
Despite your best effort in prevention, risk events might still happen. There is no way you can do to reduce the risk to zero. That is why having insurance can give you an extra peace of mind.
If you do decide to buy home insurance, there are some considerations which you should think about before approaching the insurance company or agent.
The first step is to evaluate how much coverage in home insurance you will need. The more valuables you have in your house, you will need more coverage. But higher coverages also mean higher premiums.
To keep your home insurance premiums affordable, we suggest that you base your coverage on items that you must have to enjoy your current lifestyle. This is where the home inventory list is useful for you.
For each item, determine whether they are critical to your current lifestyle. Then add the value of these items together for an estimate.
If you need help in evaluating the amount of coverage, please contact us for a free consultation.
Evaluate your home insurance coverages every year
Home insurance premiums are usually payable on an annual basis. When you receive the notification from your insurance company to renew your home insurance, you might also want to re-evaluate the coverage you need.
There are 2 scenarios where you should re-evaluate the coverage:
When you remodel your house, or incur additional renovation costs.
When there is an increase renovation costs in Singapore.
Under either one of these 2 scenarios, you should increase your home insurance coverage.
How to choose a home insurance to buy?
Many insurance companies are offering home and home contents insurance. Here are the following tips in evaluating the different home insurance products:
Do not go for the cheapest option by default. Usually, the cheapest home insurance will have less coverage. The correct way is always to go by what you need and adjust your requirements from there.
Obtain multiple quotes from different insurance companies and agent. Target a minimum of three quotations so that you can compare between the price, coverages and exclusions.
Understand the policy wordings. Most insurance contracts will have exclusions and limits to your claims. Make sure you understand the exclusions and whether are these exclusions / limits something you can do without.
If you need help in deciding which home insurance to purchase, do give us a call so that we can help you in the selection process.
Reputable Insurance Company and Agent
As with other insurance products, it is always important to buy your insurance with a reputable insurance company. A well-qualified agent like Anthola would also be able to advise you on your specific needs and requirements.
Having just a fire insurance to protect your house is not sufficient. You should also implement preventive measures for fire and theft.
However, you can never reduce the risk of fire and theft to zero. Insuring your home with a home insurance allow you to have a peace of mind. You will know that should a fire or burglary occur, you will be able to restore your home with the costs being taken care of.
If you are interested in purchasing a home insurance for your dream house and your loved ones, please contact us for a free consultation. We love to speak to you!