When Disaster Strikes, Is Your Home Protected?

Whenever the rainy season comes around, we often hear news of massive flooding in states such as Johor, Pahang, Melaka, Selangor, and more. Natural disasters such as these can cause massive, and sometimes irreparable damages to one’s home. One example would be the devastating floods in early 2022 that caused over a billion ringgit worth of damage.

This highlights the issue at hand. Misfortune can strike at any moment. We can’t predict when a natural disaster will happen, or when something important keeping our homes standing finally fails. This is why home insurance exists, and why it is so important.

Types of home insurance available in Malaysia

In Malaysia, there are three main kinds of house insurance. It can get a little confusing when comparing them side by side. Therefore, it would be a good idea to familiarise yourself with the differences between each type of home insurance. This way, you might be able to avoid the costly mistake of buying a huge insurance package that might protect something other than what you intended to.

1. Fire Policy

As unlikely as it may seem, accidents happen. One of the worst things that a homeowner can experience is their property going up in flames. Such an occurrence leaves little for the homeowner to salvage. With a flood, storm, or structural collapse, there will likely be something left to save. On the other hand, a fire will likely leave nothing left.

Generally speaking, fire insurance is one of the most common types of home insurance you can find. As such, it is also among the simplest of insurance packages, usually only covering costs for losses and damages to your residential property (excluding contents). While it might be called “fire insurance”, this policy also typically covers two other risk types, those being lightning, and explosion of gas that is used for domestic purposes like cooking.

Most fire policies will allow for additional coverage against a wider range of risks. These can include things such as flood damage, storm damage, subsidence, and other potential issues that may result in damage to your property. This means that if your home has completely burnt down, it will be rebuilt up to the policy limit.

2. Houseowner policy

This kind of insurance protects the structure of your property, ensuring that you get reimbursed for damages relating to your walls, roof, fixtures, garages, fences, and gates. However, this does exclude most, if not all material possessions that are kept within your home. So, if you notice that there is damage to your fancy marble pillars or stone walls, this is the policy you can rely on.

Basic homeowner insurance will cover most of the items that fire insurance covers as well. This includes things such as fire, explosion, flooding, and lightning. It will also cover damages that arise from theft or forced entry or exit. Just keep in mind that any action that is not clearly stated in your policy will likely not be covered.

While homeowner’s insurance can cover a wide range of damages, it will likely be limited by replacement costs. This means if your residence is totally destroyed, your insurer will only pay you up to the policy limit. Therefore, it might be a good idea to obtain an insurance policy that will cover the total amount to rebuild your home in the case of a complete loss.

3. Householder policy

Householder insurance is different from the rest as it extends protection to the contents of your property. This means that household items, furniture, appliances, personal effects, and other such possessions are all included in the policy. Worried about your precious antique collection falling over? Then fear no more with a householder policy!. It can also cover things such as jewellery or pieces of art.

This policy is perfect for those who live in fear of damaging or losing their household items and prized possessions. Be it flooding, fires, theft, and so on, your items will be guarded. As per usual, just remember to read the stipulations of the policy closely, especially with regards to items and effects that are excluded and not covered. Additionally, some policies will compensate you based on the full-value of your items without taking into account depreciation. Others may only cover the actual cash value while taking into account depreciation, so be sure you know which rules apply to your items.

Belongings like that comfortable bed and mattress or even your speakers and gaming console might have cost you more than a month’s salary to purchase. Even the curtains on your windows and the carpets on your floors will set you back thousands of ringgit if you must replace them.

There are policies out there that do indeed cover the full-value of your items. This will ensure that the insurer will pay the full amount to replace your laundry machine. However, you will need to make sure that the full amount paid back will be sufficient yourself.

Which policy is right for you?

If you are looking for a simple insurance plan, then a fire policy will be right for you. It also has the added benefit of being the most affordable kind of house insurance. However, the risks and damages it covers is also the most limited. 

If you want to cover a wider range of risks, a houseowner policy would be preferable. This policy is made for those who value their property more than their belongings.

Finally, a householder policy is for those who want the whole package, as it covers the widest range of risks and even includes items within your home. If you can’t make up your mind about which insurance to go for, there are some hybrid policies out there that you can refer to protect both your home and your items.

One more thing to note is that insuring landed property tends to be more expensive than insuring non-landed properties. This is due to the higher value of landed property. Properties such as apartments and condos usually have additional facilities, but they are for the most part insured by the management body of those buildings.