Compulsory Fire Insurance for Residential and Commercial Properties

Mr Baey Yam Keng asked  the Minister for National Development why it is not made compulsory for all residential and commercial property owners to take up property fire insurance.

Mdm Speaker, as with many other forms of insurance, fire insurance for properties is not mandated. It is the responsibility of property owners to ensure that they have the financial means to repair and restore their properties should these properties be damaged in a fire.

Nevertheless, HDB home owners who take up HDB loans are required to purchase fire insurance from the HDB-appointed insurer. In addition, under the Building Maintenance and Strata Management Act, Management Corporations are required to obtain insurance for strata-titled developments, so that they are able to undertake restoration work to the developments in the event of accidents such as a fire.

Regardless, I encourage all owners to ensure that their properties are adequately insured against damages caused by unfortunate accidents such as a fire. It would be prudent to do so.

Mdm Speaker, I appreciate that HDB wants to give flexibility for property owners to decide on insurance coverage. In the unfortunate event of a fire, it is not only the owner but, sometimes, third parties are also involved. Relations can be strained because of claims or compensation, especially when the victims are not insured or adequately insured. Can I ask how is HDB encouraging property owners or flat owners to purchase fire insurance, what is the success rate and what is the proportion of flat owners who buy fire insurance even when they are not still servicing their housing loans?

Mdm Speaker, in response to the Member's questions, more than 80% of HDB flats are covered by basic fire insurance that is offered by HDB's appointed

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insurer. We do not track the number of HDB flats covered by fire insurance that is offered by other insurers. So, the actual percentage would probably be much more than that.

Of those who have taken up HDB's basic fire insurance, certainly, more than half do so voluntarily and not because they are currently still servicing HDB loans. This is because HDB writes to and encourages them to apply for or renew their HDB basic fire insurance cover. But for those who are still on HDB loans, HDB will remind them when their policy is near expiry and if they for some reason forget or omit to do so, HDB will procure the insurance for them first and then recover the premiums later.

Premiums for HDB's basic fire insurance policy are very affordable. For instance, if you are an owner of a 4-room flat, coverage for five years would cost you $5.40 for five years; for a 5-room flat, $6.60 for five years.

This basic fire insurance cost covers the basic building structure of the flat, the fixtures and the fittings provided by HDB, to keep these premiums low and affordable for all homeowners of HDB flats. If they wish to get additional coverage of costs, they may need to get further insurance for their personal properties as well as their renovations. I hope that adequately answers the Member's questions.