A home loan can run up to 35 years, longer than most car loans or personal loans. Despite this, many homeowners either underinsure their property or skip home insurance altogether.

Fire and flood are the two risks homeowners face most often, and they aren't covered the same way. A standard fire policy won't cover flood damage unless you've added the relevant extension.

Home insurance covers the structure of a house against risks like fire and flood, and can be extended to cover contents such as furniture and electronics. Coverage, exclusions, and pricing differ between insurers.

What is home insurance?

Like all insurances, house insurance is designed to recompense you financially for the loss or damage to your house and/or its content caused by fire or any other covered perils.

In Malaysia, fire is not the only hazard that can catch you off guard, accidentally or intentionally. 

Natural perils such as flood and landslip have become a yearly occurrence in some parts of the country especially during the monsoon season. 

With that being said, it is crucial that you are aware of the types of perils (risks) that could potentially destroy your house and its contents before buying an insurance plan for your house. 

For example, if you live in an area that is prone to flooding make sure that the policy is covering that type of risk so your insurance claim would not be disputable.

Generally, insurance providers are offering 3 types of home insurance policies: 

Fire policy 

Covers for loss or damage to your house due to fire, lightning and explosion caused by gas used for domestic purposes. Zurich Fire Insurance is one example of this. It covers the building against fire, lightning, and explosion caused by gas used for domestic purposes, plus your house contents under the same policy, which isn't always the case with a standalone fire policy. Premiums are based on the Revised Fire Tariff if your sum insured is below RM10 million, and on a PIAM self-rating structure above that. You can extend the base plan with add-ons for flood, earthquake and volcanic eruption, windstorm, subsidence and landslip, riot and strike, bush fire, and damage from falling trees or branches, each at an additional premium.

Houseowner policy

Covers for loss or damage to your house, including its fixtures and fittings, due to fire, lightning, explosion, flood, burst pipes or by any perils mentioned in the insurance policy

Householder policy

Covers for loss or damage to the contents in your house due to fire, lightning, explosion, flood, burst pipes or by any perils mentioned in the insurance policy

If you live in a strata-titled property (condominium, apartment, flat), the Management Corporation (MC) has the obligation to insure the whole building with a fire policy. 

You can also insure your own unit by paying a portion of the premium to your MC, which is much cheaper.

Unless you’re looking to include coverage such as rental insurance (for landlord/lady), contents, or natural disasters, you need to purchase a separate houseowner or householder insurance policy as the MC's fire policy does not provide those coverage.

Fire VS Houseowner VS Householder: Which home insurance policy is the best?

Comparing the different types of policies from its face values won’t get you off on the right foot when insuring your most valuable asset. 

As we all know, there is no insurance providing a one-size-fits-all solution under one policy.

>> These exclusions* can be added into your policy at an additional premium

To get the most coverage and protection out of your insurance policy, you will almost always have to extend or add on the perils by paying additional premiums on top of your base plan. 

Zurich Fire Insurance, for instance, lets you extend the base plan with flood, earthquake and volcanic eruption, windstorm, subsidence and landslip, riot and strike, bush fire, and falling tree or branch cover, each priced as a separate add-on.

Oftentimes, you are advised to adequately insure your house to avoid under- or over-insurance at any policy year.

Before anything else, you might want to pay close attention to the types of risks that give rise to imminent threats to your living condition. 

Knowing this, it will pave the way for choosing the right home insurance plan that you can afford at a reasonable annual premium. 

How much should I insure my house and/or contents?

To roughly calculate the budget required to insure your house, you can use the Building Cost Calculator (BCC). This calculator can give you an estimated cost of rebuilding your house after a disaster struck. 

Keep in mind that the actual sum insured of your house may vary from the appraisal generated by this tool, so always consult a certified agent or professional valuer to get more accurate assessment.

A house is an asset that appreciates in value over time. 

The house that you bought at RM100,000 today could double or triple in a few years — and that does not include the costs of renovations and enhancements you have made to it yet. 

For that reason, you should always review your home insurance policy every year and make necessary adjustments to avoid insuring your property at a lower or higher than the true value amount.

Zurich Fire Insurance illustrates how this plays out in practice. If your sum insured comes in under RM10 million, your premium follows the Revised Fire Tariff. Go above that and it switches to a self-rating structure set by PIAM, and past RM50 million, the PIAM Technical Rating Committee takes over the pricing. The building coverage itself is also capped at the property's value, so insuring for more than that buys you nothing extra, which is exactly the over-insurance trap this section is warning you about.

When choosing a householder policy, make a list of items that you want to insure as this policy only covers items inside of your house such as your clothes, furniture, home appliances and some collectibles, if any.

Then, you need to declare all items you want to insure in the insurance proposal form. 

You should also know that the insurance coverage for the declared contents is limited to 5% of the total sum insured, whereas for platinum, gold, silver articles, jewellery or furs the insurance is limited to one-third of the total sum insured. 

If you want a higher coverage amount for these or any contents that are special to you, it is best that you buy a separate insurance policy to specifically insure those items. 

And last but not least, always keep proof of ownerships and values of the insured items, such as receipts and maybe photographs of your valuable items, securely so they’ll come in handy when filing your claim later.

How to file a house insurance claim?

Homeowners are always advised to insure their house sufficiently so that they would not overly pay the annual premium, or receive much lesser than expected compensation, which is a common frustration among policyholders.

In the settlement of home insurance claim, there are 2 types of compensations which you will get from your policy, they are either:

• Indemnity basis

The insurer will replace the items that are beyond repair based on its acceptable market value at the time of loss or damage. 

If it is building-related, the cost of repairing will minus the amount of wear and tear (depreciation). Or,

• Reinstatement basis

The insurer will pay the cost of repairing and replacing the items beyond repair with a new one that is equal but not better than the original.

When your property is hit by one of the covered perils, make sure you notify your insurance company as soon as possibly. 

In the meantime, you should also take precautionary measures when mitigating loss or damage to your house/contents. 

For example, you shouldn’t temper the situation by taking down a damaged wall on your own to amplify the loss because the insurance adjuster will not go easy on it.

If there is any repair that needs to be carried out to avoid further damage, you should obtain an estimated amount of repair required and send it to the insurance company for approval before executing the repair. 

Remember to keep the bills of works and other supporting documents to be submitted for claim to your insurance company.

All in all, a house is a financial and emotional investment that you want to commit for the rest of your life. 

Whether you have just started a family or renting it out for income purposes, insuring it against harms will give you peace of mind. Zurich Fire Insurance is one of the options you can compare directly on this page.

Compare and apply for the best home insurance now.