homeowners are under the impression that the contents of their house are
protected simply because they have homeowners' insurance. They could
not be more mistaken. Homeowners' insurance only covers your house
and not its contents, for which you will have to take out a householder's
What's the difference?
Houseowners & Householders
insurance protects the four walls and roof within which you keep
your earthly possessions. It does not cover that work of art by the
brilliant up-and-coming artist, or the one-of-a-kind antique kopitiam
table you hunted high and low for in Malacca or the Chinese cabinet
housing your valuable porcelain collection.
A basic homeowners'
policy covers perils - specifically named risks such as explosion, fire,
flood, impact or lightning. With this type of policy, any risk that
is not mentioned specifically in your policy is not covered.
However, you can purchase special policies that cover the house for all
perils except those explicitly excluded by the policy.
coverage is based on replacement cost, meaning that in the event of a
total loss, the policy will provide reimbursement, up to the policy limit,
to replace the structure. Ideally, a homeowner should buy enough
insurance to completely rebuild the home, known as replacement value.
insurance rates vary, depending on the cost of the residence. It
also used to be based on geographical location - some insurance companies
may still use that as part of the yardstick for how much premium you
To ensure the
contents of the home are properly covered, homeowners should also think
about purchasing householders' insurance. It ensures
that the contents of your home are insured against perils such as fire,
flood or theft, and is a prudent option if you live in fear of damage or
loss of your possessions.
However, read the
fine print before you buy the package. Some policies provide actual
cash value coverage that includes depreciation or full-value contents
Actual cash value
means if a power surge blows out your 10-year-old television set, the
insurance company would most likely calculate the useful life of the item
and then depreciate the item to present value. A depreciated
10-year-old television set ... well, you get the picture.
contents coverage, on the other hand, would provide for a new television
set. Basically, it means the insurance company will replace the item
you have lost. However, you will have to ensure that the sum insured
If you have
expensive personal items such as jewellery, a 200-year-old Persian rug or
an expensive painting, it would also be wise to take out a personal
property rider for those specific items.
Even if you do not
own a home but are renting, you could still need insurance. The same
rules still apply - you need to protect your clothes, furnishings, and
personal belongings from a fire or a break-in. You should have the
same coverage as someone who owns a home.
However, do read
your tenant's agreement carefully first before you rush out to buy an
insurance package. You may only need coverage for your belongings -
or you may need an actual homeowner's package if your agreement says you
would be liable should there be any damage to the dwelling.
How you find out
what is and what is not covered under your homeowner or householder
Read the insurance
policy very, very carefully, especially the fine print. It is not
likely to be fun reading but the good news is that if you read and
understand your policy before it is needed, this knowledge may save
unexpected financial losses should a problem occur. It is also best
to consult your insurance agent or the company that issued the policy for
details if you are unclear about anything. Understanding your
homeowners' or householders' insurance policy is best handled before a
claim is made.
In the case of
valuable contents, an inventory of items room by room is important,
together with information such as the purchase date, the original cost of
each item and a brief description. Photographs may be very helpful
along with the inventory. These items should be stored in a safe
place such as a safety deposit box in a bank and not in the home because
if the home is destroyed, chances are the inventory may also be destroyed.
There is so much at
stake with householders' insurance, and it is easy to lose everything you
own in a blink of an eye if you are not adequately covered.
extracted from NST Property Times - Signed&Safe