FIRE INSURANCE FOR STRATA-TITLED PROPERTIES
FREQUENTLY ASKED QUESTIONS (FAQs)
I have been informed that the fire insurance taken by the Management Corporation is compulsory. At the same time, the bank where I took a housing loan for the unit of condominium I have purchased also requested me to pay for fire insurance policy which has been arranged by the bank. Do I need two insurance policies ?
Under the Strata Titles Act, it is mandatory for the Management Corporation (MC) of buildings such as apartments and condominiums to purchase fire insurance for the whole building. The individual unit owner is required to pay to the MC his respective premium portion. If the unit is purchased through a loan, the financiers would also normally require the borrower to obtain an insurance policy for the unit. There is the possibility of a situation of double insurance under these circumstances.
However, if you have obtained the loan from a bank or finance company under the supervision of Bank Negara Malaysia (BNM), it has been agreed that borrowers will not be required to buy another insurance policy for their unit. Instead, these financial institutions will accept the insurance policy already purchased by the MC subject to certain terms and conditions. If your loan is not from a lending institution under the supervision of BNM, you will need to negotiate the insurance arrangements with the lending institution concerned.
Can I get a refund for cancellation of my insurance policy due to double insurance for the same unit?
An insured is entitled to cancel his or her insurance policy under the provisions of the policy. In the event that the insured is able to provide evidence that there has indeed been double insurance on the same building, the insured can request for termination of the policy to the insurer concerned. A pro-rata refund (for the remaining period of the insurance) may be granted to the insured by the insurer in the event the policy of insurance is terminated on the insured's request.
However please take note that a policy of insurance issued for dwelling risk is subject to a minimum premium of RM60. This is to cover the administrative and operational expenses of the insurance.
What are the covers provided under the insurance policy issued to the Management Corporation?
Usually, a Master Fire Insurance Policy is issued to the Management Corporation for Strata-Titled Properties and the following are the minimum covers under the said policy:-
ii) Subsidence and Landslip
iii) Riot Strike and Malicious Damage
iv) Bursting or Overflowing of Water Tanks Apparatus or Pipes
(NB: Covers under items (ii), (iii) and (iv) are the minimum covers to be taken as required by the Association of Banks and the Association of Finance Companies of Malaysia).
The Management Corporation would usually issue debit notes advising unit owners for the payment of their share of the fire insurance premiums for his/her unit. However, insurance details such as period of insurance are not stated in the debit note advice slip. How do I get these information?
The full details of the insurance are stated in the master insurance policy issued to the Management Corporation. Therefore, unit owners should be able to obtain these details from their respective Management Corporation to check on the insurance taken for your unit. It is advisable for unit owners to request these information from the Management Corporation in each occasion that they pay their insurance premiums.
Can the individual unit owner purchase additional insurance for his/her own unit apart from the insurance taken by the Management Corporation?
Other than the requirements under the Strata Titles Act, a unit owner may choose to effect additional insurance coverage for his/her unit and/or contents of the unit, in addition to the coverage under the Master Fire Insurance Policy taken up by the Management Corporation.
How will I be compensated under the master policy taken by the Management Corporation in the event of a loss?
[A6]In the event of a loss, the insurance company will compensate the Management Corporation as the master policy owner. The Management Corporation has the responsibility to reinstate the building with the compensation paid to it. In the event that reinstatement of the building is not possible, the Management Corporation will consult with all the unit owners on the best solution that is in the interest of all the unit owners.
Article taken from http://www.piam.org.my/news/piamnews/p017.htm
Or click HERE for Persatuan Insurance Am Malaysia (PIAM) Website.
For Persatuan kebangsaan Pembeli Rumah/ National House Buyer Association (HBA) Website & Strata Title Act information, please click HERE.