Fire insurance for homes, shops and factories: 23 common questions
Many people only learn what their fire policy covers after a flood or a fire. These questions help you find out first.
23 questions
What is the difference between houseowner and householder insurance?
Houseowner insurance covers the building itself, such as walls, roof, fixtures and renovation. Householder insurance covers the contents, such as furniture, appliances and belongings. Many landed homeowners need both; tenants only need householder.
I have the fire insurance the bank arranged with my loan. Do I need more?
The bank’s fire policy usually only covers the building, may be based on the loan amount, excludes contents, and may lack flood and other extensions. Check that the sum insured is enough and the extensions you need are there, then decide on householder cover.
The bank deducts my fire premium every year. Is the sum insured right? Can I change insurer?
Not necessarily; many people’s sums insured haven’t been updated for years. You can generally insure with another company as long as the bank is named as loss payee and its sum insured requirements are met. Inform the bank before switching to avoid double cover or a gap.
Should fire cover be based on the property price, loan amount or rebuilding cost?
Rebuilding cost. The property price includes the land, which doesn’t burn, and the loan amount has nothing to do with the cost to rebuild. Estimate it from built-up area times current construction cost.
If I under-insure, will the claim be cut proportionally (average clause)?
Yes. Most fire policies have an average clause: if the sum insured is below the actual value, the payout is reduced in proportion. For example, a RM400,000 house insured for RM200,000 may only get about half of a RM100,000 loss.
Are flood, storm and landslide covered? Do I need special perils?
A basic fire policy only covers fire, lightning and explosion, so shops and factories usually add flood through a special perils extension. Many houseowner and householder policies already include flood and storm as standard; check your own wording. Landslip and subsidence are usually a separate extension with more restrictions, so ask specifically if you live on a hillside.
Are burst pipes and water leaks covered?
Damage from bursting or overflowing water tanks and pipes is covered only with the matching extension. Slow leaks and wear and tear are generally excluded.
Is theft or burglary covered?
Not by fire insurance itself. Homes can add burglary cover to a householder policy, usually requiring signs of forcible entry. Shops and factories need a separate burglary policy.
Are furniture, appliances and jewellery covered?
Furniture and appliances can be covered under householder insurance. Jewellery and watches usually have per-item or total limits, so high-value items need to be declared or insured separately.
Do tenants need fire insurance? Does the landlord’s policy cover my things?
The landlord’s policy covers the building, not the tenant’s belongings. Tenants with valuable items can buy householder insurance, which is usually inexpensive.
I rent my house out. How should I insure it?
Insure the building and any furniture and appliances you provide, and tell the insurer the property is rented, since use affects the terms. If it isn’t declared, claims can be disputed.
What does shop fire insurance cover? Stock, renovation and equipment?
It can cover all of them, item by item: the building (if you own it), renovation and fixtures, stock, furniture and equipment, each with its own sum insured. Anything not listed is not covered.
If a fire or flood closes my shop, is the lost income covered?
Ordinary fire insurance only pays for property damage, not lost income. You need consequential loss (business interruption) insurance, which pays lost profit and ongoing costs such as salaries and rent while you’re closed.
A customer fell in my shop. Am I liable? Do I need public liability insurance?
If the fall was due to the shop’s negligence, such as a wet floor with no warning sign, you may be legally liable. Public liability insurance covers compensation and legal costs for third-party injury or property damage, and is very practical for businesses.
How is factory fire insurance priced? Does a Bomba fire certificate matter?
Mainly by building construction, the nature of the work, materials stored, fire protection and sums insured. For premises that require a Fire Certificate, having a valid one affects whether and how insurers accept the risk, so keep it current.
My factory stores flammable materials. Will insurers refuse or charge a lot?
Premiums will be higher, and some insurers accept only with conditions, such as proper storage and full fire protection. Always declare them; hiding flammable materials can lead to a rejected claim.
Is machinery breakdown covered?
Fire insurance covers machinery damaged by fire and other named perils. Sudden mechanical or electrical breakdown needs a separate machinery breakdown policy.
How should I declare factory stock when levels change every month?
Insuring at the highest stock value of the year is safest. If stock swings a lot, ask about a declaration arrangement: insure at the peak, declare actual stock regularly, and adjust the premium at the end of the year.
The insurer wants a risk survey. What should I prepare?
Have the site layout, a description of your processes, a list of fire equipment with maintenance records, your fire certificate, and stock and machinery values ready. Keep the premises tidy and exits clear; the surveyor may recommend improvements or set conditions.
What do I do first after a fire? Photos, police, Bomba?
Make sure everyone is safe and call Bomba. Once it’s out, inform your insurer and agent, photograph and video the damage, and make a police report if needed. Don’t clear or throw away damaged items before the adjuster sees them, and take reasonable steps to prevent further loss.
How long does a fire claim take? What is a loss adjuster?
Small claims may take a few weeks; large shop or factory claims can take months. A loss adjuster is an independent professional appointed by the insurer to investigate the cause and assess the loss. Invoices, stock records and asset lists speed things up.
Can several shops or warehouses be on one policy?
Yes. Many insurers allow one policy covering several locations, each with its own items and sums insured, which makes management and renewal easier.
I live upstairs and run a business downstairs in a shoplot. What fire cover do I need?
Tell the insurer it’s mixed use. The building is usually insured on a commercial basis, with the shop’s stock and equipment under shop fire cover and upstairs contents listed too. Declaring the use clearly prevents disputes at claim time.
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