As your house/property is probably your biggest asset, so you should consider insuring it. If you have taken a loan for your house, you will know that your bank will buy Fire Insurance on your behalf, this is to safeguard the bank’s interest as well as your. But take note, if your bank is buying on your behalf and premium charged to your loan, you need to be aware that the sum coverage taken by the bank is depending on your loan balance. This may be a cause of problem when there is a fire claim. Your loan balance maybe only RM100,000 but rebuilding your damaged house may cost RM700,000, and you then discover that your bank only insured your property for RM100,000.
So, the most important point to note is to check your fire insurance sum insured!
Sum Insured Amount
Your fire insurance sum insured amount should be based on the cost of rebuilding and not your loan balance or market value of your property, as market value of your property include land cost and profit margin. If you are unaware of the estimate cost of rebuilding for your property, you can use the Cost Calculator provided by PIAM. This will ensure you are adequately insured. Click here for PIAM Cost Calculator.
Insurance company of your choice
You may think that since you have a loan with your bank, you must buy fire insurance through your bank. This is not true and according to Bank Negara Malaysia directive (Prohibited Business Conduct) on 15 July 2016, to all financial institutions, your bank cannot force you to buy fire insurance through them. You are free to get quote and buy from any insurance companies of your choice. If you still have outstanding loan, you just need to name your bank in your fire insurance and submit a copy to your bank.
“As provided under the Product Transparency and Disclosure Guidelines, while the FSP may provide quotations for the insurance or takaful offered by the FSP’s panel, the financial consumer must be allowed to use the service of non-panel insurers or takaful operators if they choose to do so.” – Extract from BNM Prohibited Business Conduct