The Impact of Devastating Floods in Malaysia: Financial Losses and the Need for Comprehensive Flood Insurance

Malaysia has faced one of the most severe flood crises in decades. Torrential rainfall, overflowing rivers, and inadequate drainage systems have triggered widespread flooding across the nation, resulting in substantial financial losses for individuals, businesses, and the government. As the affected communities grapple with recovery, concerns about the sufficiency of insurance coverage have come to the forefront.

Surprisingly, only 4% of Malaysians nationwide have opted for flood insurance coverage for their vehicles, as reported by the General Insurance Association of Malaysia (PIAM). It is imperative that we educate ourselves on how to prepare for and mitigate flood risks. Insurance serves as a crucial tool for minimizing financial losses, even though we do not have a specific insurance product named “flood insurance” in Malaysia. Rest assured, we offer insurance to safeguard against flood damage to your assets.

1. Car Insurance

It’s essential to note that comprehensive car, vehicle, or motor insurance typically excludes coverage for flood damage to your vehicle.

To protect your vehicle from flood and other natural disasters such as storms, typhoons, volcanic eruptions, earthquakes, and landslides, consider adding Special Peril coverage to your car insurance policy at an additional premium. This special peril coverage extends beyond floods to encompass events beyond human control.

2. House / Home / Householder / Houseowner Insurance

Three Types of House Insurance:

(a) House Owner (Building) Insurance:

This policy covers losses or damages resulting from fire, lightning, explosion, aircraft damage, impact damage, bursting or overflowing of domestic water tanks or pipes, theft (accompanied by actual forcible and violent breaking into or out), hurricane, cyclone, typhoon, windstorm, earthquake, volcanic eruption, flood, and robbery.

(b) House Content (Householder) Insurance:

This insurance provides coverage for losses or damages caused by fire, lightning, explosion, aircraft damage, impact damage, bursting or overflowing of domestic water tanks or pipes, theft (accompanied by actual forcible and violent breaking into or out), hurricane, cyclone, typhoon, windstorm, earthquake, volcanic eruption, flood, and robbery.

(c) House Content All Risk Insurance:

This comprehensive coverage includes losses or damages due to all types of perils, including riot, strike, malicious damage, accidental damage, and theft without signs of forcible entry.

3. Commercial Property

Flood coverage is typically optional for the commercial property insurance.

Debunking Home Insurance Myths:

1. Is home insurance the same as mortgage/loan insurance (MRTA/MLTA)?

Answer: No, mortgage/loan insurance is a life insurance policy that provides a lump sum to pay off the loan if the insured person passes away or is no longer able to work due to injuries. Home insurance, on the other hand, covers the physical structure of the house. There are two distinct types of insurance.

2. Is home insurance compulsory?

Answer: Home insurance is not mandatory for all homeowners. However, under the Strata Titles Act, it is obligatory for the Management Corporation of buildings such as apartments and condominiums to purchase fire insurance for the entire structure. Individual unit owners are responsible for their respective premium portions. Non landed homeowners do not need to buy fire insurance separately, but they should be aware that home content may not be covered under the JMB Insurance.

3. Must tenants purchase home insurance for the house?

Answer: Tenants are generally not allowed to purchase insurance for the house itself due to the absence of insurable interest. Homeowners are responsible for insuring the property they own. Tenants may consider content insurance to protect their personal belongings.

4. How much should I insure my house for? Should it match the market value?

Answer: The insured amount should be based on the reinstatement or replacement cost of the property, rather than its market value.

5. Is there no insurance coverage available for woodhouse?

Answer: Standard house insurance typically covers houses with brick walls and tile, metal, or concrete roofs. For other construction types, a proposal form must be submitted and is subject to approval by the insurance company.

As a registered financial adviser in Malaysia, we collaborate with a wide range of trusted insurance companies. Our expertise allows us to arrange insurance solution tailored to your specific needs.

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