An entry guide for the average buyer
Ok, you have figured out why buying Home Contents Insurance is a great idea. Basically, it can really avoid a lot of financial and emotional distress for relatively little money. Now the next step is to figure out what a suitable plan is for yourself. With no lack of choices in the marketplace, the average buyer can easily get confused. So many choices and so many variations in cover, which then begs the question, what is important and what is not, with pricing no doubt just one of the many considerations.
Important Key Elements, Features and Benefits to understand before buying
The building
This part of the plan is designed to cover your building from a list of defined perils (risks), generally known as fire and extraneous (other) perils. The specific definition of “Building” would help the homeowner (insured) know exactly what property is being protected and what not. “Building” is commonly defined as the building structure (immovable part) of a property and may include its improvements (such as renovations and additions) and Fixtures, Fittings & Renovation (also known as FFR), which refers to renovations, fittings, fixtures, decorations and improvements added to the property by the insured. Examples include immovable household items such as kitchen cabinets, built-in cabinets, cupboards and air-conditioning systems may be included.
Your Household Contents
The word “contents” has no standard definition adopted among insurers. It may be defined simply as “all moveable items” or more specifically as “all descriptions of household goods, personal effects, possessions and valuables belonging to the insured, his family members and domestic employees living in the same household, or for which the insured is legally responsible.“ Normally it comes with the exception of some named items which can be covered more appropriately under other types of insurance plans such as Valuable Articles insurance. There is no declaration required or listing of all household contents. The insured just needs to declare a total value for them, representing the sum insured for the policy.
What about the Secondary Features and Benefits?
These may be offered as options for the insured to add to the basic policy at an additional premium or they may be provided for “free” by some insurers in packaged plans (also known as fixed plans).
1. Worldwide Personal & Family Liability
This part covers the insured as owner/tenant or occupier, including his family members and domestic employees for 3rd party liability claims. Liability cover refers to legal liability for accidental bodily injury or death, or accidental damage to property, up to a limited sum insured per occurrence, normally on a worldwide basis. Liability claims arise out of events where a member of the public can hold you liable for damages or injury incurred as a consequence of your fault or negligence or that of one of your household members.
2. Personal Accident
Many insurers throw in rudimentary personal accident coverage as well. Personal accident benefits are lump-sum payments to the insured/ spouse/ children of the family (subject to age restriction) in the event of accidental death or permanent disability occurring within a certain timeframe from the date of an accident. The payout under this section follows a “Table of Compensation” schedule which specifies the amount (or expressed as a percentage of the capital sum insured) payable for different disability scenarios. Some insurers may differentiate the capital sum insured between an adult and a child. Personal accident benefits can be offered within the insured’s property or on a worldwide basis.
3. Medical Expenses (Accident Only)
These indemnify the insured/ spouse/ children for expenses due to medical treatment arising out of accidental bodily injury. The reimbursement amounts for medical expenses is normally quite low and limited per accident (e.g. S$1,000).
4. Twenty-Four (24) Hour Emergency Home Assistance Service
This is normally a 24-hour helpline from the insurer that provides referral information and can arrange assistance. The services are typically provided by a third party arranged by the insurer. Examples of services are locksmith assistance, plumber/ electrician referral, pest control services and air-conditioning engineer assistance. For some insurers, this service may come in the form of cash payment per event for emergency repairs and services with a limit on the number of events.
5. Worldwide Personal Effects
If included, the insurer will pay for any accidental loss of or damage to the insured’s personal effects within specified territorial limits subject to a limit.
6. Pet Dog Cover
Some insurers may provide cover for accidental death and theft of licensed pet dog within insured dwelling. For more specific cover for pets (dogs or cats), a Pet Insurance plan would be an appropriate choice.
7. Rent Protector
For this section, the insurer will indemnify an insured landlord for loss of rent when the tenant stops paying the rent due under the Tenancy Agreement or leaves the insured dwelling without giving notice before the tenancy ends or the insured dwelling remains untenanted following an occurrence of murder or suicide at the insured dwelling or an event that renders the place uninhabitable..
8. Valuables
The insurer will pay the value of the valuables due to accidental loss, damage or destruction within specified territorial limits or at their option reinstate or replace the valuables with a limit on the sum insured. This usually applies to low-value unspecified items. Higher value items typically need to be specified and can be covered in full with additional premium charged.
Scope of Cover
A Home Contents Insurance plan is customarily insured on a “Named Perils” basis and the policy will state exactly what perils (risk exposures) are covered. Any perils not mentioned in the policy are deemed not to be included for coverage. You are well advised to have a good look at what is actually covered and what not. Compare Home Contents plans directly online.
Alternatively, when insured on an “All Risks” basis, the insurer will compensate for any accidental loss of or damage (in the case of household contents) caused by all perils, other than those specifically excluded. Plans are underwritten on “All Risks” basis typically cost more than “Named Perils” plans.
Basis of Settlement
When Household Contents are insured on a “First Loss” basis, claims are settled without penalty for being under-insured. E.g. a homeowner may choose to insure S$50,000 out of S$100,000 worth of home contents because he thinks that in the event of a financial loss/ damage, up to 50% of his Home Contents would be affected.
In the absence of “First Loss” basis, the “Average Clause” will apply to claim settlement meaning that the insurer can reduce payment on a claim by the percentage of under-insurance. Using the example above, instead of indemnifying the homeowner up to S$50,000, he is now only covered up to S$25,000 as his home contents are not insured up to full value.
Exclusions/ General Exceptions
The buyer should take note of the exclusions applicable to each section and the general exceptions which apply to the whole policy. As they may differ among insurers and hence it is always prudent to pay extra attention when doing comparisons.
How should you proceed from here?
With our general buyer’s guide on Home Contents Insurance a part of (Home Insurance), you can start looking at plans suited to your needs. Should you have further questions, you can leave a comment below and we would be glad to answer them. Alternatively, you are most welcome to check out our comparison and personalisation platform for a start.
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