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How is Houseowners Insurance cover different from Fire? |
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As its name suggest, the Houseowners policy is designed to protect private dwelling premises and with this in mind the coverage is equal to that in the Fire Insurance plus additional cover like the under mentioned:
- damage to the building caused by theft or attempted theft
- liability to the public in respect of accidents caused by a defect in the buildings
- loss of rent (without additional premium whereas this cover is chargeable under the Fire Insurance)
As for the important comparison on pricing, the cover in the Houseowners Insurance package is rated much cheaper when compared to the same perils in the Fire Insurance (at 0.106% against 0.187% for a detached or attached house of class 1A construction). |
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Can owner's fixtures and fittings be covered in the Houseowners Insurance? |
| A |
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Yes. The expression "Buildings of the Private Dwelling House" includes all domestic offices, stables, garages and out-buildings including fixtures and fittings therein and the walls, gates and fences around and pertaining to the premises. Examples of such fixtures and fittings that can be included are wall & ceiling lighting, air-conditioners, water heaters, built-in cabinets, built-in wardrobes and the like. |
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| Q |
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My bank has taken up a Fire or Houseowners Insurance for me. Do I still need to look into adequacy of cover? |
| A |
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Yes, of course. The financial institutes may only be insuring up to the level of their interest in your property (i.e. up to the amount of the loan) and it is up to the owner to ensure no shortfall in the sum insured. Adequacy of sum insured is a very important and fundamental part of insurance granted on indemnity basis (as against "agreed value" for instance). There is always an average condition in the policy that says that if at the time of loss the actual values should be greater than the sum insured, then the Insured shall be considered his own insurer for the difference.
Don't forget, even if the financial institute has insured your property adequately, the renovations or extensions to the building and the fixtures and fittings are factors that the financiers would have no knowledge of. It is up to you to arrange such top-up insurance requirement. |
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| Q |
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My apartment is insured by the Building's Management Corporation in accordance with the requirement of the Strata Title Act. Do I still need to look into adequacy of cover?
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| A |
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Under the Strata Title Act, the onus imposed on the Building Management Corporation is a heavy one. They have to arrange insurance for all units of the building inclusive of the common areas on reinstatement value (i.e. replacement or "new for old" values) under a "Master Fire or Houseowners Insurance Policy". Insurers would issue separate certificates of insurance for the individual unit owners and this would be acceptable as evidence of insurance of the units by the financiers. If the management corporation handles the insurance in the proper manner, you just need to consider the additional values you may have incorporated into your own unit e.g. enhancement like plaster ceilings, better quality flooring finishing, built-in wardrobes & cabinets, air-conditioning and the like. The Building Management would have insured the units based on the "standard" features and individual owners would have to ensure that changes to the units are handled separately on their own. |
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| Q |
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I bought my house 20 years ago for RM100,000. It is now valued at RM300,000 in the market. How much should I insure the house for? |
| A |
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Unless otherwise arranged, the Houseowners policy pays the insured value or the market value of the insured property, whichever is the lower subject to any excess which the Insured is required to bear under the policy. The alternative is to arrange insurance on "reinstatement value" basis. Under this agreement, the Insurer will reinstate or replace the insured property as it was when new, ignoring the elements of wear and tear on the 20 years old house. So when setting the amount for insurance purpose, be guided first by the valuation basis of your choice. If you elect to insure on reinstatement value, base the sum insured on the cost of re-construction today, without the value of land. |
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