HomeTrader Malaysia

Home Insurance

Having insurance coverage for your home is extremely important. It not only gives you peace of mind but also some form of financial security should unfortunate events like a fire, burglary or natural disasters occur.

When you take a home loan from a bank, one of the requirements is you need to buy fire insurance to cover the loan amount.

A fire insurance policy covers the loss or damage to your property or building and contents caused by fire, lighting or explosion of gas used for domestic purposes only.

The two other main types of insurance policies that you should consider in order to protect your residential property and household goods are:

House owner policy, which covers your property against natural disasters such as flood, fire, riot, strike and malicious damage.
House holder policy, which covers your household contents only, that is, moveable possessions in your property against specified risks.

You should buy both these policies if you wish to have comprehensive cover for your property.

For properties with strata titles such as flats, apartments or condominiums, it is mandatory for the joint management committee (JMC) to purchase the fire insurance for the whole building. As an individual unit owner, you are required to pay the JMC your respective premium portion.

Make sure that you get the individual certificate of the master policy issued by the insurance company from the JMC and present it to the financial institution where you took your loan from so that it will not buy another fire insurance policy for your unit.

It is good to have a Mortgage Reducing Term Assurance (MRTA). In the event of total permanent disability or death of the borrower, this policy provides for full settlement of the outstanding balance of the housing loan with the financial institution.

Financial institutions have their own panel of insurers and can arrange the MRTA on your behalf. You only pay a single annual premium, which can be charged to the loan account.

In case of early termination of your home loan, you can opt to ask for a refund of the premium for the balance of the unexpired period of your loan tenure or continue the insurance coverage.

I have taken a loan to buy an apartment. The financier wants me to buy insurance cover for the apartment, even though I am already paying for the insurance policy taken by the management corporation (MC) on the property. Why must I pay for double insurance? Can I pay for one policy only?

Under the Strata Title Act, it is mandatory for the MC of buildings such as apartments and condominiums to purchase fire insurance policy for the whole building. The individual unit holder is then required to pay to the MC, his or her respective premium portion. If the unit is purchased through a loan, the financiers would also normally require the borrower to obtain an insurance policy for the unit, leading to a situation of double insurance.

However, if you have attained the loan from a banking institution under Bank Negara Malaysia’s (BNM) supervision, it has been agreed that borrowers will not be required to buy another insurance policy for their apartments or condominiums. Instead, the banking institutions will accept the insurance policy already purchased by the MC subject to certain terms and conditions. If your loan is not from a lending institution under the supervision of BNM, you can negotiate with the institution concerned.
If I own an apartment, how will I be compensated under the master policy taken by the MC in the event of a loss?

In the event of a loss, the insurance company will compensate the MC as the master policy owner. As the unit owner, you can get your compensation from the MC.
What type of policy should I purchase to protect my house and the contents?

The compensation of insurance claims depends on the type of policy that you have purchased. If you have the basic fire policy, you will only be compensated against the loss or damage of the building by fire, lighting or explosion. The house owner policy provides you with additional cover such as flood, burst pipes. In order to protect the contents of your house, you may purchase the house holder policy.
I made a theft claim under my house holder policy when my maid ran away and took with her some of my jewellery. However the insurance company repudiated my claim. Can the insurance company do this?

One of the basic conditions in a house holder policy is that the insurance company will only pay compensation for theft if there has been violent breaking into or out of your house. In this case, since the maid did not break into the house, you will not be eligible for compensation.
I obtained 50% financing for the purchase of my house. The bank required me to purchase insurance cover up to the amount of the loan. Is this adequate cover?

In line with the principle of indemnity, the insurance company will compensate you based on the sum insured or market value of the property at the time of loss, whichever is lower. If you had insured your house at lower than its market value, you are considered to be self insured for the difference between these values. In this case, in the event of loss or damage, you will be compensated only up to 50%.
There are many items to be insured under a householder policy. How do I substantiate my claims if there has been a loss?

It is very important to be able to provide evidence to support any claim. Make sure that you keep the invoice, bill or payment voucher of such items to substantiate your claim.
What type of insurance policy should I buy to protect my house which is near or on top of a hill?

When a house is near or on top of a hill, there is a higher risk from landslide. As such, it is advisable to ensure that your house insurance policy covers subsidence and landslide. To also protect the contents of your house, you may buy the house holder policy.

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