Whenever someone brings up the topic of home insurance, their response is either a confused frown, or immediate snoring. Funnily, it’s when you hear of someone making a home insurance claim that the most ridiculous stories surface. Turns out some of these claims are actually valid. Knowing what they are may actually help you get a better deal (yes, even if nothing bad ever happens — see point four).
1. It may come with personal accident insurance
True, for some policies.
Home insurance is by definition an unappealing product. Most people just buy the cheapest one on the market, or not at all if they feel they can get away with it. This makes it a challenge for insurers to differentiate their policy from the others; especially if theirs cost a bit more.
At some point, insurers hit upon the idea of bundling it with personal accident insurance. This is the kind of insurance that pays you when you accidentally fall down the stairs or break a leg skiing, and is often an option add-on to your life or health policy. But a lot of people still haven’t noticed that you can get it as part of your home insurance — if you bother to hunt around for a policy that includes it.
Sometimes, the policy can apply to multiple family members, and even when you’re overseas. But you should be ready to pay higher premiums if you want those extras. It comes down to comparing between adding personal accident coverage to your health/life insurance versus your home insurance — picking whichever is more value for money.
The same goes for your pets. Yes, you can buy a policy that pays out upon the death of your dog or cat; just be sure to read the terms and conditions first.
2. Your loved ones don’t have to shoulder the burden
Mortgage Reducing Term Assurance (MRTA) is an insurance on the outstanding mortgage amount. HDB borrowers have something similar called the Home Protection Scheme (HPS). MRTA pays out the remainder of the mortgage in the event you decide to do something like die* before it’s paid up (*we advise all readers against dying, as it makes it difficult to enjoy your condo amenities).
You may have heard some people mention that their insurer is so awesome, they just stopped charging the premiums after a while (but still keeping the coverage). That’s a half-truth.
Insurers have worked out that, as we near the end of our loan tenure and the outstanding loan amount winds down, we’re more likely to stop paying premiums and let the MRTA lapse. That’s because as the corresponding sum assured (the payout for the mortgage) diminishes, we’re less inclined to keep paying the premiums. Because of this, they structure the MRTA so that you pay up the total amount before your loan tenure ends.
So if your MRTA becomes “free” after three quarters of your loan tenure, it’s just the work of some clever mathematicians working for the insurance company and not any real savings you’ve made.
3. You can save on bank safe deposit boxes
Annual fees for safe deposit boxes range between $160 to $500, depending upon the box’s dimensions. A common “money hack” that’s going around is to skip the box altogether and rely on home content insurance alone to protect valuables. The argument: “If you lose your jewellery in a housebreaking or a fire, you can claim your losses under home content insurance anyway.”
But people who believe the hack are exactly the ones who don’t read the fine print. The marketing copy might promise coverage for up to $5 trillion in losses or any other crazy amount, but a closer look (and a magnifying glass) will reveal exclusions for certain items and claim limits for specific items.
The most common exclusion is for lost cash (or else everyone will be claiming losses all day, every day). For valuables like jewellery, there is usually an claim limit of $2,500 per item, and a total claim limit of $5,000. Items like laptops and television sets may only have a claim limit of $500.
The lesson: You really shouldn’t trust home content insurance with high value items. If you are going to horde $300,000 worth of jewellery in your wardrobe, be prepare to be compensated with peanuts if you lose it all in an Ocean’s Eleven-style heist.
4. Referrals from insurers can save you $$$
Some home owners have gone on forums claiming their insurer has helped to lower their mortgage. To be direct, some insurers have helped with that. But they’re not doing anything that you can’t do in five minutes; nor do they have magical methods to control loan rates.
This confusion started because insurers increasingly have “home concierge services”. In addition to providing insurance cover for your property, they can help you call plumbers, locksmiths, general contractors, etc.
Some insurers work with mortgage brokers, and will put you in touch with one when you ask for refinancing. But note that it’s not the insurer who’s helping with your mortgage; they’re just connecting you to someone who can. It’s a concierge service. You can probably get the same results by going to a home loan comparison site, and looking it up.
5. Never go hungry again with home insurance
Some insurers even let you claim for spoilt food, under reasonable circumstances. If you were abroad for a week, and the fridge went kaput, your claim for rotten meat and wilted greens might be deemed valid.
In contrast, if you were at home the whole time during the episode, your insurer is going to call you bluff and is more likely to rip up your insurance policy than to offer you a fresh slab of wagyu.
Regardless, a home insurance policy with provisions for spoilt food is a good idea if you live alone, or travel often.
If you found the information in this article interesting, check out our pieces on selling versus taking a reverse mortgage and 5 unexpected steps you’ll need to take when your house burns down.
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