Mr Alfred Chia BSc, CFP, FChFP, ChFC, SAMP, Affiliate of STEP, IBF Fellow CEO, SingCapital Pte Ltd
This article is contributed by SingCapital and reproduced by Propnex team. First published on The Straits Times on 03 April 2022.
Home insurance. Many think it is a complicated subject and for a large majority, they do not think about it or even consider it important. But as homeowners indulge in a safe space within their dream property, what happens if things suddenly go wrong?
Just consider the following scenarios:
- The family is watching a movie in the living room and there is an explosion in the kitchen because someone has carelessly left the gas on.
- Your home is broken into by burglars and all your watches and jewellery are missing.
- You wake up on Sunday morning to discover that flood waters have seeped into the ground floor of your three-storey detached house after an overnight heavy downpour.
- You are charging an electrical device and the battery suddenly explodes and starts a fire in your home.
These scenarios may seem farfetched and unlikely to happen. Most would think maybe, these scenarios are possible. But it will not happen to me. As a smart home owner, do you choose to ignore the plausible or will you take steps to protect your home and your loved ones?
For all the cases mentioned above and more, this is the purpose of having a home insurance because it provides the necessary protection for your home, belongings and your family. Like always, better to be safe than sorry. But before you decide to sign up for a plan, let us walk you through what you need to consider to choose a suitable home insurance.
1. The type of coverage
Now you want to insure your home. But you should know ahead that there are different types of home insurance. Some plans provide only for the basics – you get compensation for damages caused by fires, flood, explosion and riots, civil commotion or strikes (commonly known as “Insured Perils”).
Other plans have additional features that provide for theft coverage and the option to purchase an “all risks” coverage to protect you against losses due to accidents at home. For example, while playing in the living room with his friend, your son knocks down your brand new flat-screen TV and the screen is cracked. If you have an all-risks policy, you can claim for compensation as it was an accidental damage.
2. Personal and family liability coverage
When it comes to home insurance, it is important to find out if live-in family members and domestic helpers are covered as well. Consider this situation, your home caught fire due to an electrical device explosion. The fire not only damages your property, but it also spreads to your neighbours’ units.
It caused tremendous damage to their units and there are even injuries to the occupants. In such cases, they can pursue civil liability claims for compensations which will cost you a lot of money.
Here is where you need to take note when you evaluate policies. Some policies will cover the personal liabilities and some even extend worldwide cover. Does yours cover only live-in family members? Or it covers whoever is affected around your premises? While evaluating such policies, these are important questions you will need to ask your agent.
3. Are you a landlord or a tenant?
Whether you’re a landlord or a tenant, you will find that most insurance plans provide a one-size-fits-all solution, with most targeting mainly home owners residing in their property.
But what if you are a tenant, renting the property from someone else? Landlords and tenants have different interests and these interests are frequently ignored in a bid to come up with a mass market product.
For example, rent protection and property owner liability cover will provide for added peace of mind for the landlord but not the tenant. Tenants will therefore need to opt for policies that cover their belongings and legal liability should they accidentally damage the landlord’s property.
This way, tenants can also save on premiums if they do without coverage for fixtures and fittings belonging to the landlord which are usually included in most home insurance plans.
4. Check if your policy coverage is sufficient
Perhaps the final most important thing in purchasing the right home insurance is to ensure that your home is not under-insured. It would be pointless to spend premiums each month to find that your claims are not enough when something happens.
Many of us are excited when we buy something new, whether it is the newest sound system or an expensive watch. Some people will even make it a point to tell relatives and friends about it. But what most people forget to do is to update their home insurance policy so that these new items are covered as well.
If you have any valuable items such as expensive watches and bags, you can possibly get coverage for that, with additional premium. Some policies do contain waiver of penalty or relief for under-insurance and thus, it makes sense to ask about such benefits when you review your policies.
5. Ask for added features
As mentioned for many homeowners, you may have valuable items that you paid a premium price for and you would want these to be covered. Some plans provide additional coverage such as personal accident coverage for home accidents, expenses for tracing and assessing water seepage or worldwide coverage for personal items.
These features are useful for added protection so look out for features that cater to your interests or lifestyle. This ensures that you do not pay for features you do not need and that you get the most out of your insurance policy.
A smart home owner won’t leave things to chance, but takes steps to protect his home and loved ones.
Now that we walked you through all the essential points when it comes to choosing a suitable home insurance, take time out to review the different plans so that you can make an informed choice.
It is important to understand details of the policy coverage. Selecting a plan based on the premium alone is not advisable as you might be exposing yourself to a situation which requires you to pay from your own pocket in exchange for a saving on the premium.
With so many choices, it makes sense to talk to professionals who are familiar with the different types of coverage available to help you select the coverage that best suits your needs.
And alas, if you find yourself stuck in a rut even after weighing all possible options, you may need a professional’s opinion. In this case, schedule a visit with us or book a free consultation with our trusted and renowned representatives.
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