Fire insurance covers only the perils named in the policy — typically fire, lightning and a short list of add-ons — while property all-risks insurance covers any accidental physical loss or damage except what the policy specifically excludes. The practical difference: under fire insurance, you must show your loss was caused by a listed peril; under all-risks, the insurer must show it falls within an exclusion. For most SMEs the broader all-risks form is worth the modest extra premium.
Named perils vs all-risks, in plain terms
| Fire / named perils | Property all-risks | |
|---|---|---|
| Coverage logic | Pays only for perils listed (fire, lightning; extensions for explosion, burst pipes, impact, etc.) | Pays for any accidental physical loss or damage unless excluded |
| Burden in a claim | You show a listed peril caused the loss | Insurer shows an exclusion applies |
| Typical gaps | Accidental damage, theft (unless added), many water-damage scenarios | Wear and tear, gradual deterioration, and other listed exclusions |
| Typical use | Landlord/mortgagee minimum requirements; very tight budgets | Standard choice for SMEs insuring fit-out, equipment and stock |
| Premium | Lower | Somewhat higher for much broader cover |
No property form covers everything: both exclude wear and tear and gradual causes, and both rely on you insuring the correct values. Which brings us to the clause that quietly decides claim outcomes.
Underinsurance and the average clause, explained simply
Most property policies contain an average clause: if you insure your property for less than its full value, every claim — even a small one — is scaled down in the same proportion.
Example: your fit-out and equipment would cost S$500,000 to replace, but you insured S$250,000 to save premium. You're 50% underinsured — so a S$40,000 water-damage claim pays only S$20,000. You became your own co-insurer for half of every loss without realising it.
The fix is unglamorous but simple: insure full replacement value (what it costs to buy or rebuild new today, not book value or what you originally paid), and update the sum insured when you renovate, buy equipment or grow stock. Underinsurance is the most common — and most avoidable — way Singapore SMEs get short-changed at claim time.
What landlords and MCSTs typically require
Commercial leases and MCST rules shape what tenants actually buy:
- The building itself is normally insured by the landlord or the MCST (for strata developments) — you generally don't insure the structure.
- Your fit-out, renovations, contents and stock are yours to insure; the building policy won't cover them. Leases commonly require the tenant to insure their own improvements, sometimes to full replacement value.
- Fire insurance clauses in leases often set a minimum (named-perils) requirement; buying all-risks satisfies it while covering you more broadly.
- Noting interests. Landlords and financing banks often require their interest noted on your policy — a routine request your insurer handles.
For renovation works themselves, MCSTs and landlords typically require contractors' all-risks and public liability before approving works — a separate topic covered in our renovation insurance guide.
Choosing between the two
An honest decision rule:
- Buy property all-risks if your premises hold meaningful value — fit-out, equipment, stock — or if a burst pipe, theft or accidental damage would genuinely hurt. This is most SMEs. An office package built on all-risks runs indicatively from around S$200–500 a year for small premises; actual premiums depend on your sums insured and location.
- A basic fire/named-perils policy is defensible only where exposure is minimal and the purchase is purely to satisfy a lease clause.
- Either way, get the sum insured right — the average clause doesn't care which form you bought.
Consider pairing property cover with business interruption insurance, which replaces the profit you lose while damaged premises are out of action — the property policy alone only rebuilds the room.
Frequently asked questions
What is the difference between fire insurance and property all-risks insurance?
Fire insurance covers only the perils named in the policy — fire, lightning and any listed extensions — while property all-risks covers any accidental physical loss or damage except what's specifically excluded. All-risks is broader: theft, accidental damage and many water-damage events that a basic fire policy misses are typically within its scope.
What is the average clause in property insurance?
The average clause reduces every claim payout in proportion to how underinsured you are: insure for half your property's true replacement value and every claim pays out at half, regardless of size. It exists to stop deliberate underinsurance, and it's the main reason to review your sums insured at every renewal.
Does the landlord's insurance cover my shop's contents?
No — the landlord's or MCST's building policy covers the structure, not your fit-out, renovations, equipment or stock. Tenants insure their own property, and most commercial leases explicitly require it. Assume nothing inside your unit is covered unless you insured it yourself.
Is all-risks insurance really all risks?
No — "all-risks" means all accidental physical loss except the listed exclusions, which typically include wear and tear, gradual deterioration, inherent defects and certain perils handled by other policies. It's the broadest standard property form, but the exclusions list is still worth reading before you buy.
How much property insurance does a small business need?
Enough to replace everything you'd have to buy again after a total loss — fit-out, equipment, furniture and stock at today's replacement cost, not original purchase price or accounting book value. Under-declare and the average clause scales down every claim; review the figure whenever you renovate or expand.
Related cover & guides
Commercial Property & Fire Insurance
Protects premises, renovation, stock and equipment against fire and other damage. Often required under your tenancy agreement.
Read more →Business Interruption Insurance
Extends property insurance to replace lost gross profit and continuing costs while you recover from insured damage.
Read more →Insurance Requirements for Renovation Works in Singapore
What MCSTs and landlords demand before works start — CAR, public liability, workmen's compensation — and who buys: owner or contractor.
Read more →Insurance for Retail Businesses
Public liability for customer slips, stock and shopfront cover, burglary protection and WICA for staff — retail insurance explained.
Read more →