February 22, 2016

Home Insurance


Home Insurance, or Houseowner / Householder Insurance as it is also known, is one of the most important insurance policies you can buy in your adult life. Your home is one of the largest financial investment you’ve made, and that’s why it’s so important to protect it. There are three main types of policies which you can buy to protect your home:

Basic Fire Insurance
This policy provides you with coverage against loss or damage to insured property (i.e. house, shop and factory) caused by fire, lightning or explosion.

House Owner Policy
This policy provides additional coverage compared to the basic fire policy. It includes loss or damage by aircraft, road vehicles or animals, bursting or overflowing of water tanks or pipes, theft, wind storm, earthquake and flood.

House Holder Policy
This is a policy which covers your household contents and includes coverage for fatal injury to you as the insured. This policy does not cover damage to the house itself.

If you wish to have comprehensive cover for your house as well as the contents, you should buy a houseowner policy as well as a householder policy. If your property is under financing, the financier may require you to take up a mortgage reducing term assurance (MRTA) policy to cover the interest of the financier.

Houseowner policy does not cover loss or damage due to subsidence, landslip, riot, strike and malicious damage. However, you can cover these exclusions with payment of additional premiums. Extensions are also available to cover loss of rent and liability to third parties for accidents in your house.

Householder policy does not cover theft claim if there is no evidence of forced and violent entry or exit.

Important points to note when buying insurance for your property

Houseowner policy
Insured value
You must make sure that your property is adequately insured at all times, taking into account the renovations and enhancements made to your property. The sum insured should cover the cost of rebuilding your property in the event of loss/damage. If your property is under financing, you should make sure that your financier has taken adequate coverage. Usually, the coverage arranged by the financier will be for the amount of loan taken. You may, therefore, want to take up a separate insurance cover to extend the coverage taken by your financier.

Strata-titled properties
• Master policy and individual certificate of insurance
If you own a strata-titled property, e.g. an apartment, the company managing your apartment building [management corporation (MC)] is required to take up insurance under a master policy. You must ensure that you get a copy of your individual certificate of insurance for your property to check the coverage taken up under the master policy by your MC.

• Property under financing
If your apartment is under financing, the financier may require you to purchase another houseowner policy to cover the loan taken. This will result in double-insurance. However, if your property is financed by a bank or finance company under the supervision of Bank Negara Malaysia (BNM), it has been agreed that your financier will not require you to purchase another insurance policy but it will accept the insurance policy purchased by the MC as evidence of insurance for your unit. However, the MC needs to comply with the terms and conditions required by the lending institution e.g. the insurance covers the minimum risks such as fire, subsidence and landslip.

Householder policy
Basis of compensation
You should decide on the basis of compensation of your householder policy, whether it is on reinstatement or replacement value. You will be compensated with the value of a brand new item under reinstatement basis but on the depreciated value of item lost under replacement basis.

Specific declaration of each item
You must specifically declare each item to be insured under the policy to ensure that you get the full compensation in the event of loss/damage. It is advisable to also keep receipts of items insured, if available.

Duty of disclosure
You should disclose fully all material facts in the proposal form. When in doubt as to whether a fact is relevant or not, it is best to ask your insurance company or agent. If you fail to disclose any material fact, your insurance company may refuse to pay your claim.

The price you pay for your property insurance will depend on the type of policy selected, the type of building and construction materials used. The insurance premium charged by your insurance company is the standard minimum rate in accordance with the Fire Tariff.

What you should do in the event of damage/loss
Notify your insurance company as soon as possible. You must notify your insurance company in writing with full details as soon as possible. Early notification is required to avoid any prejudice to your claim.

Loss mitigating measures
You must take the necessary measures to mitigate further loss/worsening of the situation.
• If temporary repairs are required to stop further damage, you should ensure that these are carried out immediately and the bills of work carried out should be kept as part of your claim.
• If the repairs required are of a permanent nature, you should obtain estimates of the repairs required and send them to your insurance company for approval before commencing with repairs.

Making acclaim against your insurance company
• You must submit your claim with all supporting information and documents to your insurance company.
• You should cooperate fully with the adjusters /investigators appointed by your insurance company to assess your claim.