Malaysia Insurance Law - Property Insurance Law

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INSURANCE LAW - Property Insurance

Related Topics : Auto Insurance . Business Insurance . Disability Insurance . Health Insurance . Insurer's Bad Faith . Life Insurance Law . Property Insurance

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WHAT IS THE BASIS OF INSURANCE FOR BUILDINGS (HOUSEOWNERS) AND CONTENTS (HOUSEHOLDERS INSURANCE) ?

There are basically three ways to arrange your insurance, namely

Indemnity Basis (building & contents)
Reinstatement Value Basis (building & contents)
Agreed Value Basis (antiques & works of art)

The way you insure is a crucial factor in determining how much you will be paid in the event of a claim

Indemnity Basis
If you are insured on this basis, you will be paid the cost of repairing the damages property or the cost of replacing or rebuilding the stolen or destroyed property - less an amount for wear, tear and depreciation (i.e. old for old basis).

Reinstatement Value
If you are insured on this basis, you will be paid the full cost mentioned above but without any deductions being made for wear, tear or depreciation (i.e. new for old basis). This basis, however, is more of the exception rather than the rule in Malaysia.

Agree Value
This basis is only permissible in Malaysia for insurance on antiques, works of art. Since the valuation of such items is subjective, it has to be agreed upon at the time of proposal. In the event of a total loss, the "agreed" sum insured will be paid without further reference to the prevailing market value.

The basis of insurance that you choose will influence the Valuation for Buildings and Valuation for Contents for insurance purposes.

WHAT IS THE SCOPE OF COVER UNDER THE HOUSE OWNERS AND HOUSEHOLDERS POLICY ?

The Houseowners and Householders policy is a specially designed policy to cover your home as follows :

	Sec	Houseowners to cover the Building	Householders to cover the Contents
Building	I	yes	no
Contents	IIA	no	yes
Temporary Removal	IIB	no	yes
Damage to Mirrors	IIC	no	yes
Death of Insured	IID	no	yes
Loss of Rent	IIIA	yes	yes
Public Liability	IIIB	yes	yes

Please not that the above covers are subjected to a number of exclusions, restrictions and limits.

If the above do not give you the coverage that you require, you may want to consider buying certain optional covers that are available, called extensions.

WHEN AM I CONSIDERED TO HAVE BREACHED CERTAIN POLICY CONDITIONS OF THE HOUSEOWNERS OR HOUSEHOLDERS INSURANCE ?

You are considered to have breached certain policy conditions if :

You did not notify your Insurers of a loss immediately
You did not communicate in writing with your Insurers
Your home was used for manufacturing and/or storage of merchandise
You did not take reasonable steps to keep your premises in a proper state of repair
You did not make good any defects in the premises as soon as it is discovered
You did not take steps to mitigate the loss
You did not allow your insurers to enter your premises and take loss mitigation steps
You did not notify and cooperate with the Police
You proceeded with repairs without your Insurer's consent
You submitted a fraudulent claim to the Insurers
You admitted liability or made an offer of settlement to the third party without consulting your insurers

Any of the above could give your Insurer the right not to pay your claims.

I'VE BOUGHT A HOUSE AND IS ARRANGING A NEW COVER FOR THE FIRST TIME, WHAT SHOULD I DO ?

If you are buying insurance from an Insurer for the first time, you will be required to complete a Proposal Form. You'll have the choice to choose to by Houseowners Insurance for the building and/or Householders Insurance for the contents of your home either.

Directly from any of the General or Composite Insurance Companies licensed to operate in Malaysia or
Through their Authorized Agents or
Through a licensed Insurance Broker

There are basically three ways to arrange your insurance, depending on the type of property you wish to insure. Please refer to Basis of Insurance. Since the Houseowner or Householders cover is a class of insurance that falls within the PIAM Fire Tariff, the Scope of Cover offered to the public and the minimum premium rates have been basically standardized for all general insurance companies in Malaysia. Therefore, you should choose an Insurer based on the quality of service that they can provide.

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