How do you ensure that your home is properly insured?

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How do you ensure that your home is properly insured?

#1 How to Get Sum Insured For The House Building

The sum insured for the house building is the cost of reconstruction of the building and the associated costs. It does not include the land value.

Hence it poses the problem of finding out the value to be insured. 

Some insurance companies offers online sum insured calculator. Once you provide the details of your property, the system will generate an agreed value for your house. An agreed value is the value which the insurer will pay regardless of what the actual market is at the time of claim. If you are fine with the agreed value, then it will save you a lot of trouble in finding a basis or getting a professional to do the valuation.

You can also refer to the PIAM website to get an indicative value to be insured for your house. I have given the links in the description below.

#2 How To Take Inventory of House Content Systematically

Another reason for people to delay in getting house insurance is they do not know where to begin to take stock of what they have in the house. It is too overwhelming for some people.

Here are the steps and a template to illustrate on how you can go about it systematically.

Once that is done, you can refer to the purchase invoices to fill in the details especially the high value items.

#3 How To Maintain A Proper Record

Up to this point, I will usually hear people saying why is this so troublesome.

My answer is we buy insurance not with the intention to make any claim.

But if things really happen, I want to make sure I can claim and without much hassle. Do you agree?

A proper record will ensure that we can claim for the losses from the insurance company easily. Take pictures of the bills, the items and also videos of the house content, section by section as a record and store them in the cloud.

So that in the event of a fire, burglary or major flood, you will still have the digital copies of the bills, picture and videos of the items. It will not only help you remember what you had, but also help to substantiate the existence of the items to the insurer.

I have done claims with such photos, they really helped a lot.

#4 Full Value or First Loss Basis

Typical household content is insured based on full value basis. This means that you will need to ensure the sum insured is adequate to reflect the total value of the content.

Some insurers offers the choice to insure the content of the house on first loss basis. This means that  in the event of a claim, the insurer will pay up to the amount they insure regardless of what the total value of the content you have in the house before the loss.

Scenario A for on first loss basis

You have RM300,000 worth of content in your house, you chose to insure your home content for RM100,000 on first loss basis.

A fire broke out, and RM120,000 worth of content was destroyed. The insurance company will pay you RM100,000. There will not issue of being underinsured.

Scenario B for full value basis but underinsured

You have RM300,000 worth of content in your house, you chose to insure your home content for RM100,000, which is one third of the full value.

A fire broke out, and RM120,000 worth of content was destroyed. The insurance company will only pay you one third of your losses which is RM40,000.

#5 Jewellery

The best solution for jewellery is, of course, not keeping any at home.

There are two limitations in typical home content insurance for jewellery:

No single item should exceed 5% of the total content value.

Collectively, the jewellery should not constitute more than 30% of the total content value.

This means that if your total home content is RM100,000

Each jewellery item will only be covered up to RM5,000, and totality up to RM30,000 will be covered.

Another thing most people keep their jewellery together with the original purchase invoice in the same box. Is your family doing the same?

Well, just a picture of the jewellery and the invoice and store them digitally will be good.

#6 Antiques and Paintings

Insuring antiques and paintings often necessitates agreement on their value with the insurer beforehand. Due to a lack of expertise in our country to accurately appraise such items, most insurers are hesitant to cover them. This creates challenges in establishing the agreed value to insure and when processing a claim.

Typically, documentation required to authenticate and assess the value of these items includes a valuer’s report, purchase invoices from reputable art galleries, or documents from auction houses.

Without the agreed insured value, these items might merely be viewed as regular furniture or decorative paintings in your home.”

Unfortunately. I know you might have coins and stamps and Nyonya baba chairs from your great great grandfather etc

#7 Theft By Tenants

Generally, if the tenants steals the things from the property, it is not considered as  burglary. Therefore, the house content insurance does not cover such losses. Landlords who provide fully furnished units for rental, will have to rely on the rental deposits as safety net against tenants running away with the house content or damage to the property.

However, with extra premium, some insurers do provide limited coverage for malicious damage by tenants.

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