The recent flood that caused massive damages to numerous houses in the country has led to a conversation on the uncertainties surrounding the protection of our properties. Not many people would consider insuring their houses and assets like how we prioritise our medical and motor insurance policies.
The insurance policy that covers the house and/or contents is called Houseowner/Householder policy. This policy is suitable for residential property owners and/or its tenants.
There are many perils covered under the Houseowner/Householder policy including flood. Most people take this policy because the coverage comes as a requirement under the loan agreement by their bank or loan provider. In most cases, the policy covers the houseowner portion only that is damages to the building but not its contents.
Houseowner Policy vs Householder Policy
A Houseowner policy COVERS building of private dwelling house which includes all domestic offices, stables, garages, outbuildings on the same premises, fixtures, walls, gates, and fences around the premises.
In an event of FLOOD, the Houseowner policy will ONLY COVER the loss or damage to the building caused by the flood. Examples of damage to building include water damage to wooden doors, windows, flooring, painting, and electrical installations etc.
Loss or damage to the contents such as furniture, TV, bedroom furniture, kitchen utensils, clothing, food items will NOT BE COVERED.
A Householder policy COVERS the contents in the building such as household goods and personal effects belonging to you and your family member namely furniture, kitchen utensils, electrical/electronic appliances, clothing, that are normally contained in a private dwelling house, flat or apartment.
This type of policy is usually purchased by a tenant who is renting a house. In an event of FLOOD, loss or damage to the contents owned by the tenant such as furniture, TV, bedroom furniture, kitchen utensils, clothing, food items will be COVERED under this policy.
However, this policy does NOT COVER damages to the building caused by flood. In a case of a rented home, it is recommended that the landlord purchase a houseowner policy to cover the loss or damage to their building.
Nevertheless, contents belonging to the landlord will NOT BE COVERED in this instance as the tenant has no insurable interest over such items.
HOUSEOWNER /HOUSEHOLDER POLICY
In an event of a FLOOD incident, the combined Houseowner/Householder policy will COVER both the loss or damage to the building and to its contents such as furniture, TV, bedroom furniture, kitchen utensils, clothing, food items caused by the flood (subject to terms and conditions and limits).
The Houseowner/Householder policy coverage is usually stated on the Policy Schedule as below:
No. 1.0 Section 1 – Building - Sum Insured - RMXXX,XXX.00
No. 2.0 Section 2 – Contents - Sum Insured – RMXX,XXX.00
If Section 2.0 is not stated on your policy schedule, it means that contents is not included in the coverage.
IF OWNER OCCUPIED
IF RENTED OUT
It is best for the owner to opt for both building and its contents (Houseowner & Householder policy).
It is recommended that that the landlord or house owner purchase the Houseowner policy to cover damages to their building and the tenant to purchase the Householder policy to protect their household contents.
You must ensure that the building and its contents are adequately covered.
Don’t forget to review the cost of rebuilding based on the same type of building at the same location every 3-5 years to ensure that the sum insured is increased to match the rising cost in construction material or labour.
It is advisable that you negotiate with your insurer on the coverage required and the type of coverage available that suit your budget.
When should you approach OFS?
Not all claims submitted are eligible to be reimbursed. An insurance policy is a contract between you and the insurance provider, and the protection provided is subject to terms and conditions stated therein.
If you feel that your claim is unreasonably rejected by your insurance provider/ takaful operator, you are entitled to appeal to them. If you are still dissatisfied with the final outcome, you may approach the OMBUDSMAN FOR FINANCIAL SERVICES (OFS).
OFS is a non-profit organisation that functions as an alternative dispute resolution channel. OFS resolves disputes freely and fairly between financial consumers and the financial service providers licensed or approved by Bank Negara Malaysia.
If your dispute is within OFS’ jurisdiction, we will proceed to register your complaint. OFS weighs all the facts and evidence provided by the eligible complainant and the insurance provider. We look at each case independently and impartially and we do not take sides. We also consider what is fair and reasonable in resolving a dispute.
Visit ofs.org.my to know more about us.