Fire insurance for commercial property in Singapore: what to insure
Fire and extraneous perils vs property all risks
The two standard forms differ in how they define what is covered.
A fire policy covers fire, lightning and explosion of domestic gas. Extraneous perils are added by endorsement: riot and strike, malicious damage, explosion, aircraft, impact by vehicles, bursting of pipes, flood, windstorm, earthquake and sprinkler leakage. Anything not named is not covered.
A property all risks policy covers accidental physical loss or damage from any cause not excluded. The exclusions do the work: wear and tear, gradual deterioration, mechanical breakdown, pollution, war and terrorism, and often theft without forcible entry. Accidental damage, such as a dropped server or a contractor drilling through a pipe, is covered unless excluded.
| Feature | Fire and extraneous perils | Property all risks |
|---|---|---|
| Coverage logic | Named perils only | Everything not excluded |
| Accidental damage | Not covered | Covered |
| Burden of proof | Insured shows a named peril caused the loss | Insurer shows an exclusion applies |
| Typical buyer | Landlords insuring structure; small premises | Operating businesses with fit-out, plant and stock |
| Premium | Lower | Higher, usually by a modest margin on the same values |
Most Singapore insurers now sell commercial property on an all risks form. The fire form remains common for strata units and mortgagee-driven building cover.
What the sums insured must include
The sum insured is the maximum the insurer pays and the base on which premium is charged. It must cover everything the business would have to pay to put the premises back as they were.
- Building. Owned premises, at the cost to rebuild, including demolition, debris removal and professional fees. Land value is excluded.
- Renovation and fit-out. Partitions, ceilings, flooring, electrical and air-conditioning installed by the tenant, at the cost to reinstate new.
- Plant, machinery and equipment. At the cost to replace with new items of equal capacity, not book value.
- Furniture, fixtures and office equipment. At replacement cost.
- Stock. Raw materials and work in progress at cost; finished goods at cost or selling price, as the policy states.
- Documents and data. Usually a sub-limit for the cost of reproducing records.
Liberty's Singapore package wording states the principle. The sum insured must represent full reinstatement values for renovations and improvements, full replacement costs for contents other than stock, and market value for stock, without allowance for wear, tear and depreciation. Otherwise any claim settlement is proportionately reduced.
The error most businesses make is to insure at net book value. A 10-year-old production line with a book value of S$200,000 costs S$900,000 to replace. Insured at S$200,000, it is under-insured by 78%.
How the average clause cuts a claim
The average clause, also called the condition of average or pro rata condition, is the mechanism behind "proportionately reduced". It applies when the sum insured is less than the value at risk at the time of loss. The insurer pays the same proportion of the loss as the sum insured bears to the full value.
Worked example. The figures are an example.
A tenant insures its fit-out, equipment and stock for S$1,200,000. A fire destroys the stockroom. The adjuster finds the full reinstatement value of all insured property at the date of loss was S$2,000,000. The loss is S$500,000.
- Ratio of sum insured to value: S$1,200,000 divided by S$2,000,000 = 60%.
- Insurer pays 60% of S$500,000 = S$300,000.
- Tenant bears S$200,000, plus the policy excess.
The tenant lost a quarter of its contents and recovered only 60% of that loss, because the policy was 40% short across the whole schedule. Some policies include an 85% average clause: no reduction applies if the sum insured is at least 85% of value. That gives margin for price drift, not for valuing at book.
A broker runs a values exercise before renewal. Rebuilding cost indices, equipment quotes and peak-season stock levels set the figures. Values that rise during the year need a mid-term increase.
Landlord vs tenant: who insures what
The lease decides, and most Singapore commercial leases follow one pattern.
| Item | Landlord insures | Tenant insures |
|---|---|---|
| Building structure and base services | Yes | No |
| Landlord's fit-out handed over at lease start | Yes, usually | Only if the lease transfers the risk |
| Tenant's renovation and fit-out | No | Yes |
| Tenant's plant, equipment, furniture, stock | No | Yes |
| Loss of rent after a fire | Landlord, under its policy | No |
| Tenant's loss of revenue after a fire | No | Yes, under business interruption cover |
| Public liability in the unit | Common areas | Yes, inside the unit |
| Reinstatement of the unit at lease end | No | Often a lease obligation, not an insurance item |
The tenant's policy needs the landlord noted as an interested party where the lease requires it, and often a waiver of subrogation in the landlord's favour. The landlord's policy covers the landlord's loss of rent, not the tenant's trading loss. A tenant that cannot trade for 6 months after a fire needs business interruption cover with an indemnity period long enough for reinstatement and recovery of custom. The indemnity period explainer covers how to set it.
The 2025 figures behind the pricing
Fire losses in Singapore rose in 2025, and insurers' results show it.
SCDF responded to 2,050 fire calls in 2025, up 3% on 2024. Fires at non-residential premises rose 13.5% to 471 calls. Electrical origin accounted for 43.5% of non-residential fires: wiring faults, overloaded sockets and faulty appliances.
The GIA reports property insurance premiums of S$864.1 million in 2025, up 4.1%. Property claims rose 60.5% in the same year. The segment's underwriting profit fell from S$41.7 million in 2024 to S$1.1 million in 2025. Insurers have responded with higher rates on older industrial premises, closer attention to electrical maintenance records, and warranties on hot works and storage.
Two compliance items affect both the fire risk and the insurance. Designated premises under the Fire Safety Act need a Fire Certificate from SCDF, renewed annually. A lapsed certificate breaches a policy condition on most commercial wordings. SCDF issued 2,668 Fire Hazard Abatement Notices and 1,209 Notices of Offence in 2025; non-maintenance of firefighting equipment was the most common notice. An insurer's surveyor asks for the same records.
What the survey and the proposal must get right
Property underwriting in Singapore depends on 5 declared facts. Each is a warranty or a material fact, and an error can void the policy or reduce the claim.
- Construction. Walls, roof and floor materials, and the presence of sandwich panels or timber.
- Occupation. The actual trade carried on, including any process involving heat, solvents or flammable stock.
- Protections. Sprinklers, hose reels, extinguishers, alarms and whether they are maintained and certified.
- Neighbours. The occupation of adjoining units in a multi-tenanted industrial building.
- Housekeeping and storage. Height of stock, clearance from sprinkler heads, and storage of flammables.
A broker surveys the premises or arranges the insurer's survey before placement, then checks the policy's warranties against what the business can comply with. A warranty that stock stays 1 metre below sprinkler heads fails in a warehouse that stacks to the ceiling in December. The commercial property page lists what the proposal needs.
Frequently asked questions
Is fire insurance compulsory for a shop or office in Singapore?
No law requires it for a shop, office or factory. A mortgage bank requires building cover and a landlord's lease usually requires the tenant to insure its fit-out and contents, with public liability. A Fire Certificate under the Fire Safety Act is required for designated premises, which is a safety licence, not insurance.
What is the difference between fire and extraneous perils and property all risks?
Fire and extraneous perils covers only the perils named: fire, lightning, explosion and the endorsed perils such as flood, riot and impact. Property all risks covers any accidental physical loss not excluded, including accidental damage. The insurer carries the burden of proving an exclusion under all risks.
How do I set the sum insured for a leased unit?
Add the cost to reinstate your renovation and fit-out as new, the replacement cost of plant, equipment and furniture, and stock at cost or selling price per the policy. Exclude the structure if the landlord insures it. Review before each renewal, because the average clause reduces claims when values rise above the sum insured.
Does the landlord's policy cover my fit-out and stock?
Not unless the lease says so, and it rarely does. The landlord's policy covers the structure, base services and the landlord's loss of rent. Tenant's fit-out, equipment, stock and trading loss are the tenant's to insure under property and business interruption policies.
Sources
- GIA: Annual sector results 2025
- SCDF: Emergency medical services, fire and enforcement statistics 2025/annual-statistics/scdf-annual-statistics-on-ems-fire-enforcement-2025.pdf)
- GoBusiness: Fire Certificate (SCDF)/Fire-Certificate)
- Liberty Insurance Singapore: CafeCare package wording notes
General information only, not advice on any particular policy. Cover depends on the policy wording and the insurer's terms.