Getting your own crib? Here’s one important thing you might have missed

The rising trend of young Singaporeans moving out of their parents’ houses and into their own spaces defies a long-standing social norm. According to a PropertyGuru survey, seven out of ten respondents between the ages of 22 and 39 were considering moving out in 2021 despite steadily rising rental prices. This can be attributed to how the Covid-19 pandemic caused changes to workplace settings, making people have turn to more private, accommodating work-from-home setups.

However, independence also brings new obligations. When you leave the comfort of your parents’ home, you must take responsibility for every part of your life, including obtaining insurance for your new residence. While it is generally understood that the rented space is covered by the landlord’s home insurance, it is mistaken to believe that one’s own possessions are also covered by the landlord’s policy. This means that should a renter not have tenant insurance in the unfortunate event of a fire, the financial losses incurred from the loss of his or her personal property cannot be reimbursed.

So, when someone decides to move out, what should they look out for in terms of insurance? Does purchasing tenant insurance to safeguard against the unlikely occurrence of a fire make sense financially?

AtterMen had the pleasure of speaking with Mr Ho Kai Weng, CEO of the General Insurance Association of Singapore (GIA) to discuss the importance of being well-informed about tenant insurance before deciding to move out on your own. As the trade association for the general insurance sector in the country, GIA constantly works to make all aspects of general insurance easier and more effective for consumers, agents and insurers based in Singapore.

Tenant insurance and its importance

Tenant insurance provides coverage for the belongings a tenant brings into his / her rented space. This includes items such as furniture, electronics, clothes, and any other personal valuables owned by the tenant.

If an insured peril such as a fire or flood happens in the rented space, tenant insurance offers coverage for the tenant by allowing him/her to have the financial capability to restore whatever may be damaged.

In addition, most policies also cover tenant liability coverage. This means that should you be at fault for damaging your landlord’s or neighbour’s property, the tenant insurance policy can cover the cost of replacing or repairing the damage.

Why relying on the landlord’s home insurance is not enough

A landlord’s home insurance covers liability and damage connected to tenant-occupied homes such as its property’s structure, renovation and contents belonging to the landlord, and does not cover a tenant’s personal belongings. Therefore, should a tenant’s belongings be damaged in the event of a fire, and they do not have tenant insurance, the tenant would have to pay for the damage themselves.

Areas covered by tenant insurance

Loss and damage of belongings (i.e. during a fire)

A tenant’s personal belongings brought into the rented property will be covered against loss and damage from perils such as fire, flood, burglary and theft, up to the insured value. 

Seeking alternative accommodation if the rented space is unfit for living

Some policies cover these [alternative accommodation] expenses should the rented property be uninhabitable and temporary accommodation is required. Depending on the policy, some may also provide an emergency cash allowance for individuals to replace essential personal items. 

Tenants should review their policy terms and are encouraged to consult their insurers or agents or brokers for the specifics that their policy covers.

Accidentally damaging your landlord’s property

Most policies should cover tenant liability coverage as well, in addition to covering a tenant’s personal belongings. This means that should a tenant accidentally damage the landlord’s property, the tenant insurance policy can cover the cost of replacing or repairing the damage. This includes instances such as when a tenant accidentally burns the kitchen cabinets and walls when cooking or left a tap running, resulting in damage to the property’s flooring and carpentry. Should the landlord decide to sue, the policy may cover the legal fees as well, depending on the policy terms and conditions. 

For more comprehensive policies, they can also cover unexpected liability losses, which include liability arising from bodily injury to visitors when visiting a tenant’s rented space. This means that should you be hosting a gathering at your rented apartment, and you’re sued after your friend slips and injures himself, your policy may cover the medical and legal fees required.

Things to look out for when considering the coverage amount needed

As a rule of thumb, you are encouraged to make a list of your belongings and calculate the replacement cost of your personal belongings to help you determine the amount of coverage needed. This means that should you own expensive furniture or keep items such as limited edition sneakers or expensive gadgets at home, you should opt for a policy that offers higher coverage. Be careful to not under-insure your assets as this would mean that you will get paid substantially below the value of your covered assets, should you file a claim. High-value items and valuables need to be declared specifically to the insurer to be covered in full.  

In addition, you are also encouraged to take the extra step to understand the insured perils covered under your policy. If you’re renting an old walk-up, issues such as poor plumbing would be more common, which may lead to damage of your furniture or personal belongings. As some policies may only cover specific events, it is important to make sure that the necessary coverage is provided. 

Depending on the extent of coverage required, tenant insurance is relatively affordable.  Regardless of whether you’re a first-time tenant or have been renting for many years, you are encouraged to purchase insurance for peace of mind and protect yourself against any unexpected events.

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