Fire v/s Mortgage Insurance | Insurance for Property Buyers Singapore

Insurance | Mortgage Insurance | Singapore

Planning to buy a property? Be prepared to buy the right insurance policies too! For property buyers, fire insurance and mortgage insurance are two of the most important insurance policies. You may want to buy just one of the two, to save some money. But keep in mind that mishaps can occur anytime and you need to be prepared for that. In this blog, we discuss fire v/s mortgage insurance. It will help you understand why you require both.

Fire v/s Mortgage Insurance

Fire Insurance Protects your Property whereas Mortgage Insurance Protects You

If something bad happens to your property, fire insurance can help. And when something unforeseen happens to you, mortgage insurance can come in handy.
Unfortunate events can occur anytime. Let’s assume there’s a fire in your property, then fire insurance will pay you. With a fire insurance policy, you are also covered for a variety of other events. For instance, mishaps like explosions and burst water pipes. On the other hand, mortgage insurance helps if something happens to you. For example, if you are unable to repay your home loan. This can happen if you are laid-off or diagnosed with a terminal disease.

Fire insurance Covers Property Damage, Mortgage Insurance Covers Your Loan Repayments

Fire insurance compensates you for damage to your property’s structure. Mortgage insurance compensates you so that you can continue repaying your mortgage.
So the worst has happened, and the only thing you have to look forward to now is the fact that you are eligible for a payout?  But, exactly, what do your insurance policies cover?

Fire insurance covers structural damage to your home. If your house is reduced to ashes, you will be compensated for the cost of rebuilding it. However, you will not receive money to reinstall fancy fittings in your bathroom. Mortgage insurance provides a lump sum payout designed to ensure you can repay your home loan instalments. Even if your income is reduced. This saves you from desperately selling your property or risk losing it to the bank.

Difference between HDB and Private Property

The type of property will also decide your insurance plan. You don’t have to think too hard if your property is HDB. The HDB Fire Insurance Scheme is mandatory, which offers fire insurance through Etiqa Insurance. Don’t worry, premiums are affordable ranging from $1.50 to $7.50 onwards for 5 years. HDB property owners who pay their monthly instalments with CPF are automatically enrolled in the Home Protection Scheme. And this is essentially mortgage insurance with the CPF Board acting as the insurer. It is required for those owners who use CPF to pay their instalments. For others, the HPS is optional.

On the other hand, private property owners are on their own to safeguard their assets. Condo owners can check with their Management Corporation to find out of there is fire insurance. Apart from this, private property owners can compare mortgage insurance plans to get the best-suited one. This essentially means that private property owners need to buy separate mortgage and fire insurance.

We hope the fire v/s mortgage insurance helps you understand the importance of both insurance policies. To read more on insurance policies in Singapore, head to our blog section.


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