Fire insurance

Fire Insurance

Our house is one of the most expensive things we buy in our lifetime. Our house is where all of our beloved family live, rest and enjoy life. So, we must make sure our house is secure and protected if something happen to our house like fire. There are different types of fire insurance available in the market for home owner to select such as most basic and must have insurance fire insurance, and other home owners insurance like houseowner insurance, household insurance (content insurance).

Malaysia, being an equatorial country which is all year round hot weather is tending to be catch with fire. For this reason, banks that provide the mortgage loan require home owner to purchase the fire insurance before banks approved the mortgage loan. This is mainly for the protection and security of banks themselves and house owner.

What is fire insurance and what does it cover?

Fire insurance in Malaysia is a regulated insurance. It means that its basic insurance premium is calculated based on a standard fire tariff rate FTR define by Persatuan Insurans Am Malaysia (PIAM) and is affected by the type of building (detached, non-detached, flats or apartment), construction classification of the building.

The basic fire insurance policy covers loss or damage to residential building, furniture, fixtures and fittings caused by fire, lightning or domestic gas explosion. This compensation usually covers the cost of reconstruction, replacement, and repair of damaged property. In commercial fire insurance, fire insurance is required to safeguard your buildings owned by the business  to protect the contents of businesses  premises including machinery, equipment, stock, furniture against damages caused by fire or lightning.

Although the basic fire insurance policy only covers the building against fire damage, lightning and domestic gas explosion, home owner can extended the fire insurance policy to include perils such as Riot, Strike & Malicious Damage, Explosion (with / without Boilers), Flood, Aircraft Damage, Earthquake,  landslide, Impact Damage (including/excluding own vehicles). All of the extensions will come with additional charges added to the insurance premium.

What to do if we are planning to take up a fire insurance policy for our house?

Since the fire insurance can add extensions to tailor made your needs, it is important for home owner to understand what is his requirements to fulfill his/her needs. There are no cheapest home insurance or best home insurance but its suitability. Below are a few things to consider before taking up fire insurance for your property:

Type of property: If you are an house owner of a non-landed property, Management Corporation already bought master fire insurance for the condo or flat. You can however buy it for double protection or consider other protection plans like homeowners insurance or household insurance (home contents insurance).

 Evaluate the location in which your property is located: This is important to better protect your property against damages caused by geographical natural disaster like flood, theft and impact damages.  Fire insurance extended to include other perils providing you a more comprehensive coverage tailor to your needs for the location of your property.

Determine the appropriate sum insured: It is important that you factor in the cost of rebuilding or repairing your property when determining the sum insured.

Fire insurance in the event of property damages

You must notify your insurance company in writing with full details the soonest the best.

If temporary repairs are required to stop further damage, you should ensure that these are carried out immediately and the receipt of repair work must be kept as part of your fire insurance claims. An example of temporary repair is to use a waterproof material to cover damaged area to avoid further damage by rain water.

If the repairs required permanent nature, you should obtain estimates and send them to your insurance company for approval.

Settlement of fire insurance claims

The compensation amount depends on the basis of the fire insurance cover:

Indemnity basis will pay the cost of repairing the damaged building exclude the amounts for wear and tear and depreciation; or

Reinstatement value basis will pay the full cost of repairing the damaged building without any deductions for wear and 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 fire insurance policy cover will be on indemnity basis. If you want to be covered on reinstatement basis, your fire insurance policy should have the relevant clause attached to it.

Excesses, being the amount you have to bear before your insurance company indemnifies you. It is applied to certain perils, such as landslide, windstorm, and flood claims.

Making a fire insurance claims

You must submit your fire insurance claims with all supporting receipts and documents to your insurance company. The more information you have on the damaged items, the easier and faster it will be for your insurance company to assess your claims. In the event of cooperation requested by investigators appointed by insurance company to assess your claims, remember to cooperate with them to the fire insurance claims faster and smooth.

Fire