Hi guys,

I have a question about our home insurance (fire insurance).

When I bought the house few years ago, the price was 200k and the sum insured was 160k. I have been paying this amount all this while as it's from the same bank with my housing loan and every year, they just bill the annual premium into my housing loan account.

But since now the price of houses has increased so much, I think I will have to increase the sum insured right? Normally how to decide the amount? Is it by the bank/insurance company? Or is it based on the market price? Say the houses at my area are being sold at 400k, do I increase the sum insured to 400k?

BTW, what shall I look for if I would to renew and maybe change the insurance company? Is it a must to stay with the same bank which I have the housing loan with?

Thanks

Ask a competent quantity surveyor or values to give you approximate reconstruction cost (minus foundation). Insured value should be based in current reconstruction cost.

You should increase the sum assured to your current market value.

If your property is under insured, let's say it's 50% below market value, insurance will only pay 50% base on your sum assured that you insured.

For eg your current fire insurance insured for rm200k and your property market value is rm400k. Mean you only assured 50% of your property value.

If your property get in fire and total lost, your fire insurance will only paid rm200k x 50% = rm100k instead of rm200k.

Not market value lah. No need to insure land cost and foundation.

Thanks guys. May I know shall I also include the home content value into the sum?

Yes you can. And you should. If possible itemize the big ticket items. Content insurance is normally slightly more expensive than house insurance.

You can insured what ever amount you like

The catch is that ... insurance will only pay you what the "adjuster" say its appropriate.

So you would need to know
1) cost of rebuilding your house, including architecture and such
- its hell hard for high rise, if your lower neighbour don't build, what are you gonna build on ?
2) cost of alternate housing while waiting for the build. hope you not planning to sleep on street ?
3) house content
- another hard one to determine value and existence. I bought my TV for RM2100 year back, today you can get the exact same for RM800 ... so insurance will only disburse RM800 as a fair replacement value. so as you can see no point insuring RM2100 for the TV.

so the challenge is to cover enough to replace everything needed at the point of destruction.

Ask your insurance agent ... if he is pro enough he will be able to check from his company record what is the average insured amount for similar property.

REMEMBER : burden of proof is on YOU ! insurer KPI is set on how little they pay out, so take care.

It is tough to compare reconstruction cost of a building vs replacement cost of a TV.

I like your number 2....

ok first of houseowner insurance doesnt insure the content. the value should be the costs of rebuilding, if possible with debris removal costs. check if your insurance covers that. this cost has absolutely nothing to do with market prices (because they include land & foundation).

if you want to insure your house content, go and buy a corresponding insurance.

Rebuilding = Reconstruction. Cool. We are on the same page.

PM 019-3399039 (WhatsApp only) for online home & contents insurance renewal.