Buying a home is a big investment, and like any valuable item, you'd want to make sure that you have the proper insurance in place to cover your property.
House insurance is designed to give you a financial safety net in the unlikely event of loss or damage to your property.
Since your home is almost certainly the most valuable thing you'll ever own, home insurance is a sensible step to take.
But what kind of policies can you take out to protect your property? Here’s a simple introductory guide to the different types of household insurance in Malaysia.
The Three Main Types Of House Insurance
There are three main types of household insurance to consider, offering varied levels of cover and costs to match.
Policies are available from leading financial institutions such as:
Plus a wide range of other providers.
So, be sure to check and compare covers to find the right one for you:
1) Basic Fire Policy
The basic fire policy is the simplest policy that covers your home.
This policy type covers only the value of the building itself, not the contents, in the event of loss due to damage caused by fire or lightning.
A fire policy can be extended to include a range of add-on covers such as storm damage, flood damage, subsidence (which is basically just a fancy way of saying 'the sinking of land'!), and other types of events that could result in loss or damage to the building.
2) Houseowner Policy
A houseowner policy provides additional levels of cover for your property over and above a standard fire policy.
This means cover for the physical structure of your property such as walls, roof, fixtures, fittings, outbuildings, etc. for severe weather damage, floods, fire, burst pipes, and a range of other negative events that could impact your home.
3) Householder Policy
The householder policy is designed to provide additional cover for the contents of your home.
This means in the event of an insurable event such as fire, lighting damage, floods, burst pipes etc… the value of your contents are recoverable as part of the policy.
This policy can also provide additional cover for registered individual homeowners in the event of fatal injury.
The Two Types Of Compensation
Home insurance policies will dictate the level and type of compensation you receive.
The first step is ensuring that the insured value of your policy covers the total cost of rebuilding your property or replacing your contents, in the event of loss or damage.
When it comes to such an event, there are two ways in which that payment can be assessed.
1) Reinstatement Basis
A reinstatement basis means that in the event of an insured event, the policy owner will be reimbursed the full value of the item that is damaged or lost.
2) Indemnity Basis
An indemnity basis means that a policy owner will be compensated the value of the item lost, but taking into account depreciation of the item from the original value at the time of purchase.
Now, A Quick Look At Additional Covers And Add-ons!
Property insurance can often be tailored to provide flexible cover that suits your needs.
That means there are a significant range of complementary policies and additional covers which you can take out to ensure a greater depth of cover for you and your home.
Here are some key elements of additional cover which you might consider:
1) Mortgage Loan Insurance
Mortgage loan insurance offers additional cover for your home loan repayments in the event of a claim covered by insured events.
That means if you have to leave your home due to an insurable event, or you suffer an accident that puts you out of work, your home loan repayments are covered.
The types of mortgage loan insurance are commonly known as MRTA and MLTA, and there are also Takaful ones called MRTT and MLTT.
2) Landlord Insurance
If you have a property that you've put up for rent, there’s a good chance that income forms an important part of your finances.
So what do you do if a tenant skips out without paying rent, or damages your property and leaves you with the bill?
Landlord insurance or rental covers provide insurance policies that cover landlords for financial loss due to these negative events.
3) Home Maintenance Cover
Home maintenance cover really does what it says. It provides insurance cover for repairs and fixes to problems caused by poor home maintenance.
That means if a faulty plug socket suddenly burns out your electrics, or a broken pipe stops your water running, you’ve got financial cover to call in the professionals and fix the situation.
4) Kampung House Insurance
It’s also worth mentioning that owners of kampung houses can access a unique cover designed specifically for their property.
Kampung house cover is an affordable insurance policy which provides cover against fire and lightning damage, and often includes elements like an emergency lump sum payment after loss, as well as personal accident, accidental death, and funeral expenses cover.
10 Reasons To Review Your Home Insurance Policy
If you already own a home insurance policy, congratulate yourself for being a well-prepared homeowner!
Over time, your home may go through upgrades and/or downgrades, and perhaps the contents of your home have changed as well. What used to be a spare room is now a room to display your vintage Lego!
With this change though, you might want to consider reviewing your home insurance policy so that it can protect you (and its contents) even better.
Don’t have a form of home insurance yet? Worry not! With our tips, you’ll be better prepared to apply for one in the future.
#1: Property value has increased.
The property’s market value will increase down the road, so your home insurance coverage should be increased too to reflect this value.
#2: Personal content has increased.
The items in your house at the time of your insurance purchase may have been upgraded with more expensive items, so your old coverage may not be enough should the items be damaged or stolen.
#3: Home improvements/refurbishment.
Any renovations or improvements will increase the replacement cost of your home. Hence, you should adjust the coverage value accordingly.
#4: You’ve started a home business.
In this situation, you might need additional insurance for your business operations and equipment. It can come in the form of a separate policy though, so ask your agent first.
#5: New additions to your backyard or garden that might increase risk.
In this context, it’s things like trampolines, pools, and playground sets. It’s an added risk, so ensure the coverage covers any accidents that might happen when in or around these.
#6: Personal assets need to be protected.
As your net worth, income, and personal assets grow, it’d be dangerous if someone files a liability suit against you and the coverage in your homeowner insurance is insufficient. Adjust your policy based on your finances.
#7: Installing safety and security devices.
They provide safety and they may qualify you for a discount on your policy, especially if you install them after you’ve gotten your homeowner’s insurance policy.
#8: Adding a pet to your family.
Depending on the pet, it may require additional coverage or a change in rates. If a pet falls under a higher risk category, it could mean higher premiums to pay.
#9: Renting out your property.
Find out if your current policy still applies to any damages or loss incurred while your property is rented out.
#10: New discounts may be available.
Most of the time, insurance companies will offer new discounts to lower your premium. Talk to your agent to find out more about it!
Reviewing your home insurance policy will ensure you have better coverage, protect your financial assets, and even save you money! It may take time to review it thoroughly, but trust us, it’ll all be worth it in the end.
Insuring your home is an important decision, so always read the small print and ensure you understand what you’re covering, and how to claim in the event that you need to. Also, make sure the insured value covers your financial requirements in the event of loss or damage to your home and/or contents, so if in doubt - speak to the professionals to ensure you’ve got the appropriate cover for your home.