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Q MY QUESTION relates to the insurance of private properties such as condominiums.

The management corporation (MC) is required by law to insure the property, excluding the interior of the individual units.

The bank that we obtained a mortgage loan from also requires us to buy fire insurance for structural damage to protect its interests.

We also buy fire insurance to protect the contents and the structure of the house. I find all this a complete waste of money.

Why can’t the insurance bought by the MC be used to protect the bank’s interests?

Is it some scheme by the banks and insurance companies to cream more money from the consumer?

Also, some banks ask for a ridiculous amount of insurance on a property.

What is the extent of the cover of the insurance purchased by the MC? If there is damage caused by a fire, is this insurance bought by the MC meant to restore the unit to its original condition -that is, its condition prior to any renovation being done after the unit was first purchased?

If so, and if we have not done any renovation to our home, does it mean that it is sufficient for us just to buy insurance for the house contents only?

A The MC’s fire policy covers the structure and the common property, and will pay for the reinstatement of the building structure and the common property after a fire.

Structure refers to the building. This includes the common areas, pillars, columns, party walls, windows, external doors, floors, ceiling and roof.

The MC’s policy will cover and restore the structure to its pre-fire condition. Improvements made by the home owner will not be covered.

There could be some overlap between the MC’s and the home owner’s fire insurance policies.

If there was no improvement to the unit, buying a house contents policy would be sufficient.

NTUC Income’s home insurance policy covers structure/building, renovation and contents against various perils.

It is possible for home owners to buy cover for house contents only. The premium for a $50,000 household contents cover is only $105 a year. There is a 15 per cent discount for a longer term cover of three years.

If the property has been renovated and substantially improved, it is prudent to purchase a policy to cover the renovation as well.

As a result of the renovation, there may be an increase in the value of the property as well as a higher amount of bank loan taken up by the home owner.

The home owner’s coverage should take that into account.

It is important for the bank, which is the mortgagee, to continue having good security after a fire. For this reason, the bank requires at least an insurance pay-out to reinstate the property to its pre-loss condition.

Freddy NeoGeneral ManagerNTUC Income

Q WHY must tenancy agreements be stamped?

As I understand it, a lot of people do not have it done. Does it mean that they run foul of the law? Does a stamped agreement become a more legitimate document before the court?

Or is it something we pay good money for nothing?

A Stamp duty is a tax imposed on documents or instruments, and such duty is imposed by a statute, the Stamp Duties Act (Chapter 312). By section 52 of the Act, an unstamped tenancy agreement would not be admissible as evidence in court.

An unstamped tenancy agreement is not void or ineffective; it is simply disregarded by the courts. Such an agreement may become admissible as evidence only on payment of the prescribed duty and penalty, which could be four times the amount of the original duty.

When you need it most, you will not be able to enforce the termsof the tenancy  agreement in court. There are also offences under the Act dealing with evasion and intent to evade duty.

In short, a prudent landlord would have the tenancy agreement stamped at the appropriate time and stay on the right side of the law.

Chew Mei ChooPartnerShook Lin & BokAdvice provided in this column is not meant as a substitute for comprehensive professional

Source : Sunday Times - 23 Jul 2006