If are you planning to buy a fire insurance for your property, there are a few things that you need to be aware of. You will first need to determine the coverage amount, type of insurance, and any additional coverage needed?
Sum insured amount
You will first need to determine the sum insured amount for your property. Sum insured amount is to be based on the estimated cost of re-building your property, never to be based on your market value of your property. This is because the market value of your property would include the land cost, whereas in event of a fire, what is destroyed is your physical structure, and not the land.
So, the coverage amount is the cost of rebuilding. Apart from the rebuilding cost, you shall also take into cost of debris removal, as well as professional fees such as surveyors and architectural fees.
Unless you specifically cover the cost of debris removal and professional fee as a separate sum insured, otherwise, most insurers will include these 2 major costs as part of your total sum insured. So, your sum insured will be the cost of rebuilding PLUS debris removal and professional fee included.
Most people will have trouble determine the cost of re-building for their property, so PIAM (The General Insurance Association of Malysia) has a cost calculator to help you in determining the cost of re-building. The PIAM cost calculator can be found at the link below:
What to Insured
Apart from insuring the physical structure of your building through the Cost Calculator above, you need to know that it only covers damages to your physical building only. This does not include content in your house, like furniture, electrical appliances, personal items etc.
So, you will also need to determine the value of the content in your house, or stocks, raw materials, goods held in trust/commission etc if you are a business property owner.
In the event of a fire, it is likely that your contents will be destroyed too, so you will need to determine how much to insured.
Select the Type of Insurance
Once you have determine the cost of rebuilding for your property AND the content value, you can now select the type of insurance. You can opt for the basic fire insurance, or commercial fire insurance if it is a business premise, or a houseowner/householder insurance, where you will determine if you wish to insured only your physical property or content only, or both.
If you are a high-rise property owner or a strata title owner, you will not need to buy a fire insurance for your physical building as it would be covered under a Master Strata Title Fire Insurance taken up by your Management Corporation or Joint Management body. You will only need to buy fire insurance for your content as the master fire insurance will not include coverage for your content.
A basic fire insurance provide the least cover, it only covers damages due to fire, lightning and domestic explosion. So, you just want the least minimal coverage against fire, you can opt for the basic fire insurance. But if you want more coverage, then you should opt for a houseowner (building) householder (content) insurance.
Full Value or First Loss
When insuring for your content, you have the option of insuring the full value of your content or based on first loss basis. Full value basis means that if your value of content is worth RM300,000, you insured for RM300,000, so in the event of a loss, you will be covered full. Or, you can opt to insured RM50,000 only or other amount on a first loss basic, meaning in the event of a loss, maximum payout will be RM50,000. The purposes of a first loss coverage is dependence on you, as there could be assumption that in a event of a fire, no all your stock may be destroy or in burglary, it is unlikely that the theft can tuck away the full stock quantity.
Additional Coverage
Whether you are taking up a basic fire insurance or a Houseowner/Householder insurance, there are some additional perils not included, so you have the option to include them if you think it is necessary:
- Riot, Strike and Malicious damage – A lot of events are unpredictable, the Bersih, Riot in Hong Kong, etc are unexpected events, so if you dont have RSMD added, any damages caused by riot, strike or malicious damages will not be covered.
- Bursting or overflowing of water tanks, apparatus or pipes – water damage to your property or stocks due to tanks overflows etc can be extensive, so do consider if it should be added for commercial insurance
- Falling Trees or Branches – If your property is surrounded by tall trees, you may want to consider adding this cover to safeguard your property against falling trees or branches
- Theft (content) – You can include Theft cover to safeguard against theft for your content
- Subsidence and Landslip Cover – If your property is located on high ground or near slope, you may want to include this cover.
