Understanding home contents insurance

If you’ve only got a minute:

• Fire insurance covers structural damage while home contents insurance protects your belongings from fire, theft, and more.
• Consider high-value items, renovation costs, and potential risks to determine appropriate coverage.
• While optional, home contents insurance can prevent significant financial losses from unforeseen events.
• Be aware of exclusions like unoccupied premises or limits on valuables to ensure adequate protection.

Your home is more than just a physical space – it's where memories are created and cherished belongings reside. While fire insurance covers the structure of your home, it leaves your furniture, electronics and personal valuables vulnerable to risks like theft or water damage. Home contents insurance fills this gap, safeguarding what makes your house a home.

What is home contents insurance?

Home contents insurance is engineered to protect movable possessions inside your home against specific risks, including fire, theft and accidental damage. It covers items like furniture, appliances, electronics, personal belongings and valuables such as artwork or collectibles.

Key differences between home contents insurance and fire insurance at a glance

Unlike fire insurance, which is often mandatory for homeowners with mortgages, home contents insurance is optional but provides crucial protection. 

Fire insurance provides coverage for damages caused by events such as fire, to the structures of your house – walls, structural pillars and permanent fixtures. On the other hand, home contents insurance provides a payout for the contents of your home that is not part of the structure – renovations, appliances and personal belongings.

Here's a simplified summary of DBS myHome Protect II coverage:

Here’s a simplified version of HDB Fire Insurance Scheme:

Source: HDB

Coverage for home contents and renovations varies by policy, which can impact your premiums. Take some time to compare plans before deciding which one best suit your needs.

Is it worth buying home contents insurance?

Given the significant financial burden of replacing or repairing damaged belongings, it may be prudent to consider investing in this coverage.

Some common scenarios where home contents insurance can come in handy include:

• Fire, lightning or explosion
• Flood
• Bursting, leaking, discharging or overflowing of water tanks or pipes
• Malicious act of any person other than you, your household or any other person living in your home
• Theft or burglary by violent and forcible entry into your home by any person other than a member of your household or any other person living in your home

If a disaster like a fire renders your home uninhabitable, fire insurance alone won't cover temporary housing. Home contents insurance fills this gap, providing financial support for relocation and protecting against both financial and emotional losses.

Consider a home contents insurance plan with an annual premium of S$122.16. Over 10 years, you would pay a total of S$1,221.60. Now imagine in the 10th year, a microwave explosion damages your kitchen counter and appliances, costing S$5,000 to repair and replace. With home contents insurance, this entire amount could be covered—making the premium a small price to pay for protecting against significant financial losses.

Who should buy home contents insurance?

You might find home contents insurance relevant if:

• You invested in valuable electronics or furniture and spent extensively on home renovations
• You’re a renter protecting your belongings in your leased property
• You’re a collector of art, watches or own expensive furniture
• You wish to have coverage to protect your children’s educational devices such as tablet or laptop
• You keep valuables at home, such as jewellery or family heirlooms
• You’re a frequent traveller with expensive luggage or gear

Common exclusions

Home contents insurance typically excludes certain scenarios and items. For instance:

• Unoccupied premises: Coverage does not apply if the property is vacant for more than 60 consecutive days.
• Valuables and item limits: Valuables like jewellery are capped at 30% of the total sum insured, while single items (except furniture, personal computers, audio/video equipment, pianos or organs) are limited to 5% of the sum insured.
• Consequential Loss: Indirect losses, such as financial costs resulting from property damage, are not covered.

To ensure smooth claims, keep receipts for your insured items as proof of ownership. Claims assessors may still review cases lacking receipts, but it’s best to document your assets thoroughly.

Additionally, select coverage based on the replacement value of your belongings and renovations as if they were new. For example, if you’ve recently spent S$100,000 on renovations or installed high-value systems like a home theatre, consider opting for a higher tier of coverage to protect your belongings effectively.

Regularly reviewing and updating your policy ensures that your coverage remains adequate as your needs evolve.

Understanding the benefits, limitations, and exclusions will help you make informed decisions to protect your home and belongings. Whether you're a homeowner or renter, this coverage can offer peace of mind and financial security against unexpected events.

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Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.