Property purchase is one of biggest purchase for a typical Singaporean. With almost 80% of Singaporeans are HDB-dwellers, we shall look at the Fire Insurance from HDB in details. Since many HDB owners asked if they need additional home fire insurance from insurance companies, we shall discuss that too.
First, who needs HDB Fire Insurance and what it covers?
Flat owners with an outstanding HDB loan. must buy and renew the HDB fire insurance for your HDB. The sum assured is based on the type of housing that you own. The HDB Fire Insurance is renewed every 5 years and the premium is payable by cash. Below shows the benefits and premiums.
You might be thinking why are the sum assured based on flat type when the valuation for a 5-room flat in 2 different estates, e.g. Ang Mo Kio and Jurong, can be very different? The reason is the HDB fire insurance only covers the cost of reinstating damaged internal structures, fixtures, as well as areas built and provided by HDB. The furniture, renovations and personal belongings are excluded from the HDB fire insurance. Whereas, your valuation of property may include other factors such as the land cost and your renovation of your house. In layman term, should a fire breaks out, this insurance will compensate the cost of getting our flat to the original state base on the HDB floor plan. If we had installed additional power points, improved the flooring tiles or fixed a kitchen cabinet, these will not be compensated.
We need to purchase Home Insurance in order to cover for the renovation, fixtures and contents in our house. Below is an overview of the additional coverage provided by home insurance.
In additional to the above difference, a home insurance allows you to increase your sum assured for the various component to a value that we deem reasonable. However, this flexibility can also lead to another question for home owners i.e. what is the reasonable amount to cover? If we over-insured our property, we may end up paying more premium than we should. However, if we under-insured, we may be hit with the Average Clause.