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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.
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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.
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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).
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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.
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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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