The Differences between Fire Insurance and Home Contents Insurance
Most of the belongings you will pay for in your lifetime are stored in your home. This means that should something disastrous happen to your home, you could lose everything you own. Despite the crushing magnitude of such a loss, few Singaporeans adequately insure the contents of their home, thinking their existing fire insurance is enough.
What is the main difference between Fire Insurance and Home Contents Insurance?
You might have vaguely remembered having signed up for fire insurance when you purchased your property. If you think that is enough to protect everything in your home, you are prey to one of the most dangerous misconceptions that Singapore homeowners have – that fire insurance and home contents insurance are the same. While the two might sound complimentary, they actually deal with completely different things.
Fire insurance offers a payout in the event that your home is structurally damaged, whether by fire or some other disasters on the list. Structural damage refers to damage to things like walls, floors, and pipes—basically, the building itself as well as the original fixtures and fittings that were there when you purchased the property.
On the other hand, home contents insurance deals with the exact opposite—it offers a payout for contents of the home that are not part of the structure itself, or that you added to the home after you purchased it. Renovations you made after purchasing your home fall under this category, as well as furniture, appliances and even personal items.
What exactly is Home Contents Insurance?
Home Contents insurance is designed to insure the things in your house. Generally, these are items that fire insurance does not cover. Usually, that includes possessions in your home such as your television set, washing machine, furniture, and piano.
While the mix of home items covered will vary from policy to policy, some even insure personal items such as your identity card and credit cards. It might also be possible to receive a payout for your pet if it dies in an accident under the insured perils, or for alternative accommodation should your home have to undergo repairs when an unexpected event affects your habitat that makes it uninhabitable.
As you can see, Home Contents insurance policies can include quite a diverse mix of items and also vary considerably in price and in the level of coverage. It is thus important to take the time to compare policies before deciding which one would best suit your needs
Why should you get Home Contents Insurance even if you already have Fire Insurance?
As discussed earlier, fire insurance usually protects the building structure of your home and the original fixtures and fittings. Your policy will usually contain a list of situations in which you’ll be able to make a claim, all of which tend to be rather catastrophic.
Even if you manage to recover the full sum for which your property is insured under the fire insurance policy, be aware that coverage is limited to the structure of your home and original fixtures and fittings, and any renovations you might have undertaken will not be compensated.
This is problematic as most Singaporeans spend a significant amount of money renovating their homes. Furthermore, if you have extensively renovated your property, these alterations could well be a huge contributor to the value of your home.
In addition, if your home should suffer an unfortunate incident like a fire or bursting water pipes, a huge part of the losses you incur will be on the items you own. Imagine not being compensated for your expensive electronics and appliances.
Few people realize just how narrow the protection offered by typical fire insurance policies is. In order to protect all the things you love in your home, it is a good idea to sign up for a comprehensive coverage home contents insurance policy that can work in tandem with fire insurance to protect the value of your property and everything in it.
By Joanne Poh
Disclaimer: All info contained herein is intended for your general information only and is not a substitute for insurance advice. If you have a specific question, please consult our insurance experts at 6702 0202.