When it comes to ensuring that the value of your home and its contents are rightly accounted for when unfortunate circumstances hit, no effort should be spared in unearthing the best available insurance plans to suit your needs.

Don’t get burnt by sudden disasters; get the right policy for your needs. Image courtesy of Thinkstock.

Assessing your needs

The first step to take in insuring your home is figuring out what you really need, as this will give you an idea of how much coverage to get. Reflect on how much you are financially invested in your piece of property, and how much more you are willing to fork out to protect its value.

• Do you have many valuable possessions?

Take into account your state-of-the-art computer, expensive jewellery, artwork, or designer furniture. You may also wish to insure items of sentimental value, but don’t get carried away. What is important to you may not be of monetary value.

DirectAsia.com covers loss or damage to your home contents, which they define as “anything inside your house and garden that you would take with you when you move”.

• Is your location prone to damages?

Singapore’s location on the globe may keep us safe from hurricanes or volcanic activity, but some homes remain at risk to the occasional flash-floods and earthquake tremors. If your home is perched on ground level or located on the lower floors of the building, at a low-lying area like Bukit Timah Road or Stevens Road, you might want to choose a policy that covers your belongings and renovations in the event of a flood.

DBS’s HomeShield plan insures against floods with damages up to an excess of $100. DirectAsia.com insures against floods and earthquakes, but covers only homes that have not previously suffered damage from floods and other listed disasters.

• Did you splurge on your home?

If you purchased your home for an extravagant price and lavished it with renovation projects, you might want to spend a bit more to insure your investments in the home. However, stick within your budget and go for the best option you can afford.

Aviva’s Home plan covers fixtures like built-in wardrobes for a maximum sum insured of $100,000.

Basic coverage

Some houses come with their own insurance policies.

When you buy a new Housing Development Board (HDB) flat, you may be required to apply for two kinds of insurance: the HDB Fire Insurance Policy, and the Home Protection Scheme. The former is meant for those taking a HDB loan. The latter is for those who have arranged for monthly housing repayments via their Central Provident Fund accounts.

The Home Protection Scheme, in particular, is a mortgage-reducing insurance scheme. It ensures that your home will not be lost should you not be able to complete your housing loan payments.

Similarly, private homeowners taking out a bank mortgage have to first take out a fire insurance policy. Some banks, like Standard Chartered, offer free home-insurance for the first year when you take up a housing loan with them.

However, these policies usually have very basic coverage. In a typical fire insurance policy, only the walls and ceilings of your home are covered in the event of a fire. This means you cannot claim for the loss of your flat-screen television. Neither can you claim for items stolen or damaged by other means.

Choosing the right policy

If your basic home policy is insufficient, you should search for better solutions in the market.

Take note of these key points when deciding on a suitable plan:

• Items covered

Check if the policy covers renovation costs and the value of contents of your house. Some policies even cover personal accidents and liability, loss or damage to valuables outside your home.

• Definition of terms

Insurers do not all have the same definition of risks. Pay attention to these definitions as they can make a difference to what belongings you can seek damage against, and ultimately the amount you can claim.

• Excess clause

This is the minimum amount you have to bear for all losses except those resulting from fires. Find out exactly how much you have to foot per item. For example, DBS’s HomeShield plan has an excess clause of $100 for water damages.

Tips:

1. Most insurers offer more than one housing plan. Some, like Aviva, offer you the flexibility to add only the benefits you need, so you won’t have to pay more for a comprehensive plan you won’t fully utilise.
2. Over-insure rather than under-insure, as it is common to accumulate new items in your home over time. The less you insure, the less you can claim. However unlike many insurers, Great Eastern’s HomeSupreme plan has a ‘First Loss Policy’ that does not penalise you for under-insuring.
3. If you are a pet owner, look out for a plan that includes coverage for your beloved animal. Great Eastern provides coverage for the accidental death of pedigree dogs, but there are plans that cover cats and dogs for a handful of unfortunate situations.