FEATURE
INSURANCE PROTECTION: FLOOD AND FIRE
Serious thoughts to be pondered for the unexpected BY: MAGES PV LINGAM
T
he Malaysian Financial Planning Council (MFPC) recently did a video tournament for the univarsity students, which stated the importance of financial planning for households. Dr Nurul Shahnaz Ahmad Mahdzan, senior lecturer and researcher, University Malaya said many people have too many excuses and fail to plan. She added it is actually a process of managing and organising an individual’s financial matters over the lifecycle. Dr Nurul said “Ignorance is a voluntary misfortune,” Malaysia is not aligned with the Pacific ring of fire, therefore we are assumed to be relatively free from natural calamities such as volcanic eruption or earthquake. However, it is not an excuse for households not to take flood and fire insurance seriously. As history has proven otherwise,
Hazruddin Hassan 20 | FEBRUARY 2017 www.propertyinsight.com.my
plenty of towns in Malaysia have been hit by flash floods, and houses caught fire due to malfunctioned circuits over the past few years. Hazruddin Hassan, chief underwriting officer of general insurance, Zurich Insurance Malaysia Berhad (Zurich) explained that in Malaysia, there are currently no stand-alone flood protection plans for properties. Flood coverage is usually purchased as an extension to the fire policy. “Generally, a basic fire policy provides coverage for the building only and covers property loss or damage caused by fire and / or lightning. As flood is an optional peril, customers will have to pay additional premium to include flood coverage in their fire policy. For comprehensive protection, we would encourage house owners to purchase the house owner and householder policies, which provide a wider coverage as compared to a fire policy,” said Hazruddin. Flood coverage is included by default under house owner and householder insurance; which covers losses or damages to the building and household contents. For these policies, the total premiums payable are inclusive of flood coverage. In Malaysia, recent news from the online flood reporting website Flood List reported that 25,000 people in the Northeastern states of Peninsular Malaysia, especially Terengganu and Kelantan, were displaced due to the rising flood levels which exceeded the danger mark during the Northeast
monsoon. The floods affected businesses as well as forced tens of thousands of people to evacuate their homes. However, Hazruddin pointed out that flood insurance coverage is not only for house owners who own properties in flood-prone areas. “All property owners, including owners of high rise buildings such as apartments and condominiums, are susceptible to financial losses caused by flood. Flooding can also be caused by man-made occurrences such as the bursting or overflowing of domestic water tanks and pipes. Therefore, flood coverage is an essential component of your property insurance,” said Hazruddin. Generally, property owners who include flood coverage in their policies will be protected against damages and losses due to: • the overflowing or deviation of water from normal channels or either natural or artificial water courses; • bursting or overflowing of public water mains and; • any other flow or accumulation of water originating from outside the building. The above excludes losses and damages caused by subsidence and landslip. As the basic premiums for fire insurance are based on the regulated Fire Tariff, there is no differentiation of premiums rates based on risk areas. Assets that can be insured against flood included residential