GEORGE TOWN, Nov 22 — Recent changes in global weather patterns have triggered flash floods across various parts of Malaysia, causing billions of ringgits in property damage.
While natural disasters such as floods and landslides cannot be predicted, there are ways to mitigate losses, particularly through property insurance.
Many remain unaware of home insurance policies that offer coverage for damage to properties.
In Malaysia, there are three main types of home insurance: fire policies, homeowner policies, and householder policies.
Here’s a closer look at what these policies cover.
Fire Policy
As the name suggests, this policy provides coverage for fire, lightning, and explosions caused by domestic gas usage.
It is a common insurance policy that many homeowners purchase to protect against losses and damage to their residential property. However, it is important to note that this policy does not cover the contents within the house.
Policyholders have the option to include additional coverage, at a higher premium, for other risks such as flood damage, storm damage, subsidence, landslips, vehicle or animal impacts on the building, falling trees, burst water tanks or pipes, riots, strikes, and malicious damage.
This policy compensates based on the actual value of the damages to the property or the cost to rebuild it if it is completely destroyed.
It also covers the costs of removing debris, disposing of damaged materials, and providing alternative accommodation while the property is being repaired or rebuilt.
Homeowner Policy
This insurance covers damage to your property caused by risks such as fire, explosions, floods, impacts, lightning, and theft involving violent or forcible entry.
In essence, this policy compensates for the cost of replacing or repairing physical damage to your property, including walls, gates, fixtures, fittings, and roofs, resulting from the covered incidents.
However, basic policies typically do not include coverage for the contents within the property, such as furniture, electronic items, personal belongings, or jewellery.
The policy will specify the perils it covers. For additional risks such as subsidence, landslips, riots, strikes, or malicious damage, policyholders may need to purchase add-on protection.
Some policies also offer coverage for temporary housing and living expenses if the property becomes uninhabitable due to a covered incident, though this depends on the insurer.
Additionally, you may opt to include personal liability and medical payment coverage, which provide financial protection and cover medical expenses if someone is injured on your property. This feature is also subject to the insurer’s terms.
Householder Policy
Also known as personal property insurance or a home content policy, this insurance protects the contents of your property, including furniture, built-in fixtures, documents, appliances, jewellery, and valuable artwork.
The policy compensates for losses arising from damage to your property’s contents due to incidents such as fire, lightning, explosions, natural disasters, impact, or theft involving forcible entry.
It also covers the loss of use of insured items and offers options to include personal liability and personal accident coverage.
However, policyholders must list the items they wish to insure. Compensation may not always reflect the full value of these items, as depreciation is often factored in.
To facilitate claims, proof of ownership and item values, such as receipts and photographs, are required.
Each policy specifies the perils it covers and typically excludes risks such as subsidence, landslips, riots, strikes, and malicious damage. Adding these risks requires paying an extra premium.
For properties at risk of natural disasters like floods, investing in home insurance is essential to help rebuild after a catastrophe.
Some insurers in Malaysia offer comprehensive policies that combine homeowner and householder insurance, providing broader coverage under a single plan. These policies may include benefits such as emergency cash relief, death benefits, and landlord benefits to compensate for rental income losses.
Additional variations of property insurance include:
Mortgage Loan Instalment Protection: Covers monthly mortgage payments if the property becomes uninhabitable due to an insured event or the policyholder’s death.
Landlord Insurance: Covers malicious damage by tenants, runaway tenants, or legal fees for issuing demand letters. Premiums for home insurance policies range from as low as RM50 to several hundred ringgits annually, depending on factors such as the property’s value, risk levels (e.g., flood-prone areas), and the extent of coverage.
It is crucial to read the fine print of each policy to ensure it meets your needs, including compensation amounts, emergency relief provisions, and coverage for specific perils.
