So you’ve just bought your dream house; flanked with a gorgeous front patio, a brick oven installed anew, and a master bedroom adjoining a walk-in closet space. It’s your baby. Not only has invaluable time gone into this considerable investment, but also blood, sweat and possibly both kidneys. It’s only sensible to take the next calculated step towards protecting your property with house insurance.
All your savings are in it, after all, and you wouldn’t want unforeseen incidents like fires or burglaries to plunder your life’s hard work.
Even smartphones come with a warranty, so undoubtedly the hefty fund attached to your dwelling should carry its financial safety net. Allow us to introduce a little thing called house insurance.
Choosing the right kind of policy for your property is just as essential. If you’re unclear on the different types of house insurance in Malaysia, join us in this introductory guide!
The 3 Main Types of House Insurance
Also known as householder insurance, home insurance is a safeguard for your property and its contents against loss or damage. The insurance also covers any liabilities, i.e. accidents that occur inside your home or in the immediate vicinity.
As a Malaysian homeowner, there are three main types of house insurance policies to consider, with varying coverage and costs.
1. The Basic Fire Policy
Let’s start with the simplest policy of all. The basic fire policy only covers the value of the building itself, excluding its contents, against loss or damage due to fire, lightning, and Bond-esque explosions. This policy type can be extended for a range of add-on covers, such as flood damage, storm damage, subsidence (the caving in or sinking of your land), and other disastrous events.
Fortunately, our country isn’t frequently affected by earthquakes and such, so we’re good.
2. The Houseowner Policy
A houseowner policy covers your property against the common mishaps of fire, lightning or explosion, but offers additional levels of coverage. This includes the physical structure of your property in case of severe weather damage, such as floods or burst pipes, so you can rest assured that your roof and fixtures are financially protected.
3. The Householder Policy
Lastly, the householder policy offers additional cover for the contents of your property. In the insurable event of a fire, lightning strike, flood and so on, the value of your contents will be recoverable under this policy. Registered individual homeowners may also opt for additional cover for fatal injuries.
How will you be compensated?
These house insurance policies will dictate the type of compensation you receive. Imagine this: your beautiful home is engulfed in flames, burning to the ground in a pile of embers and scorched bricks. What do you do in such a dire situation? Call your insurance company, of course.
The first step is to ensure that your policy’s value covers the total costs of rebuilding your property and replacing your possessions. Two ways your payment can be assessed are:
- Reinstatement Basis—In case of an insured disaster, the policy owner (you) will be fully reimbursed for the item that is lost or damaged.
- Indemnity Basis—The policy owner will be compensated the value of the lost item while taking into account the item’s depreciation from its original, purchased value.
A few things to consider:
You wouldn’t fumble for your chequebook at the first home visit. The same thing with home insurance; don’t buy the first policy that comes your way and choose the wrong protection for your safe haven. Carefully consider what it is you need before jumping the gun.
Estimating insured value
An integral part of ensuring sufficient protection is summing up the total costs poured into building your property. Make sure to include renovation costs as well, as it typically constitutes the ‘insured value’. The sum insured value doesn’t make up your property value, but rather the cost of reconstruction and replacement for damaged contents.
Therefore, you ought to choose an insured value that goes beyond rebuilding costs.
Familiarising yourself with add-ons
This scope of investment does bring about significant paranoia. However, you don’t have to get every kind of insurance available. Aside from the central policies we discussed, you can consider additional coverage that suits your specific needs, such as mortgage loan insurance, home maintenance and landlord insurance.
These add-ons cover a more comprehensive range of damages in their eponymous aspects. Still, you should only go for them if necessary since they don’t weigh delicate on your overall tally.
Picking the right insurer
To secure the right coverage benefits, you have to pick the right insurer. You can start by checking the quality of an insurer’s customer service or their willingness to help you understand the provided policies. Next, glimpse over their claims settlement history and the number of successful claims that were paid out. Transparency is key to a good home insurer.
Some of the leading financial institutions offering these policies in Malaysia are:
- Takaful Malaysia
- Bank Negara
- Great Eastern
- Tokio Marine
With multiple options to choose from, it’s up to you to shield your baby—I mean property. We’ll leave you with this last piece of advice: read the fine print!
Rumah-i is a reputable rental service company that provides straightforward solutions for property owners and investors across all real estate areas. Feel free to find out more about our property management services or read more informative articles in our stories section.
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