Insurance Policies for Residential Property Series – Making a Claim

You must submit your claim with all supporting information and documents to your insurance company. The more information you have on the damaged items, the easier it will be for your insurance company to assess your claim.You should cooperate fully with the adjusters/investigators appointed by you insurance company to assess your claim.

Insurance Policies for Residential Property Series – Settlement of Claims

The compensation amount depends on the basis of the cover:

a. Indemnity basis will pay the cost of repairing the damaged building less the amount for wear, tear and depreciation; or

b. Reinstatement value basis will pay the full cost of repairing the damaged building without any deductions for wear, tear or depreciation, provided that the sum covered is adequate to cover the total cost of reinstatement.

In the absence of any special provision, the cover will be on indemnity basis. If you want to be covered on reinstatement basis, your policy should have the relevant clause attached to it.

Excesses, being the amount you have to bear before your insurance company indemnifies you, are applicable for certain perils, such as overflowing of domestic water tanks, windstorm, earthquake and flood claims.

Insurance Policies for Residential Property Series – Things should know when making a claim

If your property suffers damage/loss, first of all, you must notify your insurance company in writing with full details as soon as possible. Secondly, 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 done should be kept as part of your claim. An example of temporary repair is to use a waterproof polyethylene/plastic sheet to cover damaged area to avoid further damage by rain water. If the repairs required are of a permanent nature, you should obtain estimates and send them to your insurance company for approval.

Insurance Policies for Residential Property Series – Things should know when buying insurance cover for your property: Insured value and sum insured

Ensure your property is adequately insured at all times, and take into account the renovations and enhancements made to your property.You should also decide on the basis of compensation for loss/damage to your property, whether it is on indemnity or reinstatement basis, and the sum insured shall reflect the choice. When purchasing a householder policy, you must ensure that the sum insured reflects the coverage needed to replace all the contents in your property.

You must also declare items that you want to insure specifically to ensure that you get the full compensation in the event of their loss/damage. You may also take additional coverage for valuable items such as artwork, jewellery, antiques or collectibles.It is also important to keep documents that show the proof of ownership and the value of items insured. Photographs of your valuable items, if available, may also be very helpful in the event of a claim.

Insurance Policies for Residential Property Series – Payment of Premium

Premium must be paid and received by your insurance company within 60 days from the inception date of the cover, otherwise the cover is automatically cancelled and you will still have to pay the proportion of the premium for the 60 days. It is advisable that you pay premium directly to the insurance company. Should you decide to pay the premium through your agent, ensure you cheque is made payable only in the name of the insurance company.

Insurance Policies for Residential Property Series - Responsibility for Purchase of Insurance

If you are buying a property from a developer, which is under construction, the insurance of the property is the responsibility of the developer. You only need to insure the property upon vacant possession from the developer.

For properties with strata titles such as flats, apartments and condominiums, it is mandatory for the management Corporation (MC) to purchase fire insurance for the whole building. The individual unit owner is required to pay to the MC his/her respective premium portion.

At the same time, if the unit is purchased through a loan, the financier would normally require the unit owner (borrower) to obtain an insurance policy for the unit, leading to a situation of double insurance.

But if you have obtained the loan from a financial institution under Bank Negara Malaysia’s supervision, borrowers will not have to buy another insurance policy for their units. Instead, these financial institutions will accept the insurance policy already purchased by the MC subject to terms and conditions. In this instance, you need to obtain the individual certificate of the master policy from the MC and present it to your financial as evidence of insurance. If your loan is not from a financial institution under the supervision of Bank Negara, you can negotiate with the institution concerned.

Insurance Policies for Residential Property Series - Type of Insurance Policies

Generally, there are three main types of policies to protect your property and household goods: -

Fire Insurance Policy
Fire insurance policy covers loss/damage to your property building and contents caused by fire, lightning and explosion of gas used for domestic purposes only. Click here to read an article posted highlighting the risk and perils.

Houseowner Policy
This policy covers your building, including its fixtures and fittings, garage, walls gates and fences, against several specified risks.

Householder Policy
This policy covers your household goods only, i.e. the moveable possessions in your property, against specified risks.

If you wish to have comprehensive cover for both property and its contents, you should buy both houseowner and householder policies.

Fire Insurance Policy – Risks & Perils

It is important to get adequate insurance coverage for your premises in order to provide sufficient protection to your property. Amongst all, Fire Insurance is the most common and important insurance that is required.

There are several perils can be chosen under a Fire Insurance Policy to cover your property against risk. The premium for your fire insurance policy is depending on the perils that you want to be included in. The perils that usually available by most of the fire insurance companies are as follow: -

Fire:
Destruction or damage to the property insured by its own fermentation, natural heating or spontaneous combustion or its undergoing any heating or drying process cannot be treated as damage due to fire. Spontaneous combustion means some goods, such as copra or coal, can spontaneously heat and catch fire, when stored in bulk.

Lightning:
Lightning may result in fire damage or other types of damage, such as a roof broken by a falling chimney struck by lightning or cracks in a building due to a lightning strike. Both fire and other types of damages caused by lightning are covered by the policy.

Explosion/ Implosion:
An explosion is a sudden increase in volume and release of energy in a violent manner, usually with the generation of high temperatures and the release of gases. An explosion causes pressure waves in the local medium in which it occurs. An explosion is caused inside a vessel when the pressure within the vessel exceeds the atmospheric pressure acting externally on its surface. An explosion may cause fire damage or concussion damage.

Implosion means bursting inward or collapse. This takes place when the external pressure exceeds the internal pressure. This policy, however, does not cover destruction or damage caused to the boilers (other than domestic boilers), economizers or other vessels in which steam is generated and machinery or apparatus subject to centrifugal force by its own explosion/ implosion. These risks can be covered in other special policy, which is specially designed to handle these risks.

Aircraft Damage:
The loss or damage to the property (by fire or otherwise) directly caused by aircraft and other aerial devices and/ or articles dropped there from is covered. However, destruction or damage resulting from pressure waves caused by aircraft travelling at supersonic speed is excluded from the scope of the policy.

Riot, Strike and Malicious Damage:
This peril is defined as ‘the act of any person taking part together with others in any disturbance of the public peace, or the action of a lawfully constituted authority in suppressing such act.

Storm, Tempest
The peril is to cover caused by abnormal weather conditions, not damage attributable to poor maintenance or wear and tear, such as a leaking flat roof.

Impact Damage:
Impact by any Rail/ Road vehicle or animal by direct contact with the insured property is covered. However, such vehicles or animals should not belong to or owned by the insured or any occupier of the premises or their employees while acting in the course of their employment.

Subsidence and Landslide including Rockslide:
Destruction or damage caused by Subsidence of part of the site on which the property stands or Landslide/ Rockslide is covered. While Subsidence means sinking of land or building to a lower level, Landslide means sliding down of land usually on a hill.
However, normal cracking, settlement or bedding down of new structures; settlement or movement of made up ground; coastal or river erosion; defective design or workmanship or use of defective materials; and demolition, construction, structural alterations or repair of any property or ground-works or excavations, are not covered.

Bursting and/ or overflowing of Water Tanks, Apparatus and Pipes:
Loss or damage to property by water or otherwise on account of bursting or accidental overflowing of water tanks, apparatus and pipes is covered.

Sprinkler Leakage:
It covers for property damage caused by unintentional discharge from an automatic sprinkler system. However, such destruction or damage caused by repairs or alterations to the buildings or premises; repairs removal or extension of the sprinkler installation; and defects in construction known to the insured, are not covered.