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Fire Insurance for
Strata-Titled Properties
Source: Persatuan Insuran Am Malaysia
http://www.piam.org.my/news/piamnews/p017.htm
FREQUENTLY ASKED QUESTIONS
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Q1:
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 ?
A1: 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. |
Q2:
Can I get a refund for cancellation of my insurance policy due to double
insurance for the same unit?
A2: 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. |
Q3:
What are the covers provided under the insurance policy issued to the
Management Corporation?
A3: 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:-
i) Fire
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). |
Q4:
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?
A4: 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. |
Q5:
Can the individual unit owner purchase additional insurance for his/her own
unit apart from the insurance taken by the Management Corporation?
A5: 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. |
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Q6:
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 |
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