Fire insurance alone does not cover full cost of fire in one's home: Insurers

Fire insurance covers only the expenses incurred to restore a building's structural integrity after a fire. PHOTO: ST FILE

SINGAPORE - Fire insurance alone is not sufficient to cover the full costs of a fire in one's home, insurers said, adding that home owners should purchase a home insurance policy as well.

While fire insurance covers only the expenses incurred to restore a building's structural integrity after a fire, home insurance is more comprehensive, typically covering personal property, removal of debris and alternative accommodation during renovations.

At least two fires this year have resulted in deaths. In May, a Bedok North flat fire killed three people including a three-year-old, and in March, another fire in a New Upper Changi Road flat claimed one life.

Some victims of home fires whom The Straits Times spoke to previously said they regretted not purchasing home insurance.

On Sunday (July 24), Mr Jimmy Tong, managing director of general and group insurance at Great Eastern, said there is a common misconception that the Housing Board's fire insurance - which is mandatory with every purchase of a HDB flat - is enough.

"The cover is very basic as the insured value is limited to either the outstanding loan amount or the cost of reinstating the building structure.

"This is why it is important for a separate policy covering renovations, alternative accommodations during renovations, and (the) content of the house," he explained.

Mr Pan Jing Long, head of general insurance at Singlife with Aviva, said his company has not seen an increase in the number of inquiries for home insurance this year.

"This is likely due to how home insurance is still viewed as an administrative addition, rather than an essential purchase," he said, cautioning that HDB's fire insurance scheme does not include household contents such as furniture and personal belongings, or the cost of work done during renovations.

He added that home owners also often overlook incidental costs such as alternative accommodation, the loss of rent, or damages to third-party property.

"These are important elements to consider, especially if there is widespread damage to the property," Mr Pan said.

Ms Annie Chua, vice-president and head of personal lines at NTUC Income, said home owners should take up a home insurance policy to cover the potential damage to their home's contents, as well as any damage caused to their neighbour's property.

"This is especially important in a densely populated nation like Singapore, as it is not uncommon for fires to spread beyond a unit or to neighbouring houses, even for landed properties," said Ms Chua, whose company saw a 20 per cent increase in the number of new home insurance policies issued in the first half of this year, compared with the same period last year.

Mr Tong, whose company saw an increased number of inquiries for home insurance between January and May this year, said it is important for home owners to know the coverage of the home insurance plan they have purchased.

Ms Chua cautioned that there is a misconception among some home owners that home insurance insures the amount they had paid for the property.

Home insurance claims cover only the cost of reconstructing the property, and it is almost always lower than the market value of the property, she said.

Mr Tong said: "Our property... is one of our most expensive investments and valuable assets. Rebuilding a home damaged by fire and other unexpected perils, and counting the losses of your destroyed home contents, can be costly if you do not have a comprehensive home insurance plan."

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