All About Home Insurance: Do You REALLY Need It?

What are the chances of a fire breakout, water damage or theft at your home?

I can hear you say either of these:

• “Hardly a chance as it's unlikely that would even happen.”

• “Well, my home is already insured against a fire breakout.”

This may sound familiar to most of us who do not believe in or have not purchased home contents insurance. But let’s take a long, hard look at the facts at hand.

Fact 1 Most homes only have basic fire insurance — this covers the reinstatement of the internal and external structures of your home. However, it does not compensate you for damaged renovation works, nor furniture or anything else that are stolen or destroyed.

Fact 2 Fires or flash floods can often lead to bigger problems, like burst water pipes or short-circuiting of electrical appliances within a household. The costs of restoring these damages can be staggering.

Fact 3 In apartments, fire and water damage incidents can be caused by neighboring units. These incidents may damage your home and belongings. When such incidents happen, they can have a major impact on your liquidity. Just think of the amount of work and expense required to fix and replace the damages.

Choosing the right coverage for your home

With the multitude of policies in the market, how do you select the 'right' one? What should be the right mix, in terms of coverage? If you're an Owner-Occupier Besides a comprehensive cover for your physical home, think of how you can further stretch your dollar to protect you and your family.

If there's a mishap within the insured premises, there are home insurance policies that provide personal liability coverage, as well as 24-hour Emergency Home Assistance Services Should your home become uninhabitable because of whatever has occurred, some policies also cover the cost of a temporary accommodation until your property is fully restored.

If you're a Landlord If you are leasing out a plain property without renovation and furnishing, it makes sense to opt for basic coverage for the internal and external structures. But if your tenanted property is fully renovated and furnished, it is wise to expand the coverage to include the loss of or accidental damages to contents and renovation.

Moreover, as a landlord, you take on different risks, such as potential rental loss in the event of property damage. There are also legal liabilities, should the mishap at your property affect your tenants' and neighbors' well-being. These risks should be well-mitigated with the right protection.

If you're a Tenant

You may think that your landlord’s insurance will cover your losses if there’s a break-in, fire, flood, or other catastrophic events that may wipe out your belongings. This is not the case as the coverage in the landlord’s insurance will typically only protect their own interests. So, your own furniture and appliances are your sole responsibility. They ought to be well protected.

Just like landlords, all tenants have their share of liabilities. You need to be prepared to compensate for loss of or damage to your landlord’s buildings, renovation and contents that arise during your stay, or if there is third party injury from an accident on your part.

Conclusion

With the plethora of options available for you, it can be daunting to pick the right cover for your home. The key is to keep track of the costs that have been spent into building your house and the value of your home contents to determine the appropriate level of protection your home needs.