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Government servants forced to
have two fire policies
The Star 18/9/2004
GOVERNMENT servants buying sub-divided properties are being unfairly
penalised by having to buy two fire insurance policies for their
apartments.
This is a waste of money since they can only file one claim should a
fire break out.
Only those which government housing loans face this problem of
double insurance, not those with housing loans from the banks.
The problem of double insurance occurs because on signing of the
loan agreement, government servants have to agree to insure their
flat for the length of the loan under a fire policy.
On the other hand, the management corporation of the apartment
insists the owner pays for his share of the master fire policy.
The purchase of a master fire policy is to comply with the Strata
Title Act 1985 which requires the management corporation of a
sub-divided building to insure the building against fire up to its
reinstatement value.
Since 1996 banks have not insisted on borrowers getting a fire
policy because they accept the master policy taken up by the
management corporation of high-rise buildings as adequate evidence
of insurance.
The master fire policy is a single policy which covers the
apartments and the common area. The premium each unit owner has to
pay covers the insurance of his unit as well as the common area.
Unfortunately, for those with government housing loans, the Treasury
does not accept the master policy.
When we brought up the issue with the Treasury, it responded that
borrowers need only pay the management corporation the extra
insurance for the common areas (covered under the master policy) but
not covered by the Treasury’s fire policy (which covers the flats
only.)
However, we do not think that this is the right solution at all. If
those with government loans only have to pay premium for the common
areas it means that the premiums on their units (since the master
policy covers every unit) will have to be borne by others.
This is not fair to the other unit owners. The better solution is
for the Treasury to follow the banks and accept the master policy as
proof that the properties are adequately covered.
S.M. MOHAMED IDRIS,
President,
Consumers Association of Penang.
(via e-mail)
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