Hi Folks, welcome back to Investment Income For Life and my Part 2 yapping on the above subject. Coming off from my Part 1 post on Home Insurance, I hope I do not give an impression that everyone needs to purchase an insurance to cover for building structure in event of a fire or other peril. The thing is that both private Condo and HDB actually already stipulated mandatory coverage which I should just briefly mention in Section 1 below for those interested in the detailed technicalities so that we do not buy the wrong insurance coverage- the focus should be on Home Renovation and Content which will be discussed in Section 2 below as well as common peril in Section 3 such as leaking water from your unit into the neighbours below and causing of 3rd party liability due to water damages or injuries from the resultant slippery floors.
1. Fire Insurance For Building Structure Generally Already Covered
(i) For private condominiums
The Management Corporation Strata Title body ("MCST") will actually need to purchase fire insurance to cover fire damages to the entire building structure and common areas. By building, it also includes the initial fittings such as windows, doors, floorings, water pipes, aircon, gas pipes, electrical wiring and false ceiling concealment work etc that were furnished by the original developer during TOP. Nevertheless, these does not cover any subsequent enhancement or upgrades which can be quite substantial.
Basis of law: The law for this is stipulated under Section 70(1) of the Building Maintenance and Strata Management Act (BMSMA) of Singapore, the Management Corporation Strata Title (MCST) is legally mandated to purchase and maintain a master damage insurance policy for the estate against fire, lightning, explosion, and other prescribed risks.
(ii) For public HDB
If you bought your HDB flat using an HDB housing loan, you (the flat owner) are legally required to buy and renew the HDB Fire Insurance policy every 5 years for the entire duration of your loan. If your loan is paid off: Once your mortgage is S$0, the mandatory requirement drops, and keeping the fire insurance becomes completely optional (though highly recommended as basic prudence).
Basis of law: The Prescribed Legislation: Interpretation (Housing and Development Board — Fees) Order 2026 (Under Section 46(1) of the Interpretation Act 1965). Section 46(1) of the Interpretation Act is the legal "bridge." It gives the Ministry of National Development the concrete legislative authority to draw up binding rules (like the Fees Order 2026) that legally solidify HDB's administrative right to force flat purchasers into the mandatory HDB Fire Insurance Scheme.
2. What is the Home Insurance Coverage That is Normally Missing and Actually Needs to Be Covered?
The costly parts that are not covered in event of fire will be your renovation and home content. Simply put, these will be your enhancement or home purchases after getting the keys to your unit. For example, some folks will change the entire flooring or hack away walls, building magnificent TV Consoles with luxurious wall features and build new wardrobes and cabinets. These renovation alone can cost S$10K to S$200K depending on the enhancement. This is not cheap. Hence one needs to buy personal home insurance to cover this essential component to ensure you have a decent size funds to redo your personal space.
3. Water Leakages From Your Unit Spreading To Neighbours Unit and Getting Lawyer's Letter and Lawsuits.
This is actually a common problem that one will sooner or later encounter. The scary part is that if your unit causes your below neighbour's ceiling to leak, you will be held 100% responsible for repair costs if you are living in a private property and 50% split of repair responsibility between upper and lower floor if you are living in a HDB (there is now a special scheme where HDB will chip in 50% for repair and remainder split between the neighbours).
The bomb here is actually not the repair bill but the consequential damages from the leak that causes say S$100K due to extensive damages. The Singapore Court will not follow the 50%-50% split. They will look into who is the negligent party and there is a probability and financial exposure here that you maybe held responsible for over 6 figures sum of damages being filed against you.
This is where home insurance 3rd Party Liability protection comes into place. You would want to prevent a huge dent to your wallet in such an unfortunate event.
For the fun of it, this coverage and protection is strangely known as the "Family Worldwide Personal Liability". The mind blogging use of the term "Worldwide" here is that it actually covers more than home risk. Say if you travel overseas and were eating an ice-cream and you accidentally dropped the ice-cream and an elderly man stepped on the dropped ice-cream and sue you for injuries from slipping on your ice-cream, you can activate this coverage here to cover for 3rd party liabilities. The only reason it is often bundled into home insurance policy is that leaking of water to the unit below is one of the very common problems that are likely to occur.
4. Other Common Issues to Note Regarding Home Insurance Coverage
Tracing and hacking to trouble-shoot water leakage in home is often costly and can cause a few thousand dollars of financial damage. Take note that not every home insurance policies cover this aspect- they only cover for consequential water damages to tiles and walls but DO NOT cover for the hiring of plumber and contractors to do hacking through tiles for tracing of water seepages behind walls or ceilings. For example, SOMPOS which used to have it under their Home Bliss series policy under "Enhanced Peril" has actually quietly removed them. I can also no longer find this coverage under their latest HomeMax or HomeVital polices.
The only insurance companies that I know of that still insured the seepage trouble-shooting and repair are MSIG and Income Insurance Ltd but even then, they are only willing to cover this on a co-payment basis. For example, Income Insurance will only cover such water seepage tracing and repair work for up to maximum S$5,000 and only subject to 80% of any cost with the remaining 20% chipped in by yourself.
Parting Thoughts
It is crucial that one actually buys his or her own home insurance protection in order to cover the gaps in protection from areas as above-mentioned, other than the usual building structure reinstatement. Ok, that's all from me today on the topic of home insurance coverage- have a great week ahead!
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