Home Insurance overview: Insurance tips for home-owners and people renting houses or condos.
You should only take into account the replacement value of your house and belongings when calculating the amount of insurance cover you need. Buying insurance equal to the purchase price of the complete property is not to your benefit.
You are paying for extra cover that gives you nothing extra. Why?
Take for example a house that costs only 10 million Baht to rebuild; and you want to insure it for 20 million Baht (Over-insurance). [You purchased the house for 20 million Baht]
If this house is completely destroyed, the insurance company will only compensate you for 10 million Baht because this was the actual loss determined by an independent survey company. Paying extra premium provides you no additional cover.
If you are renting a property, you should ask the owner for a copy of their current insurance policy. If they are unable to show you one, you can assume that there is no insurance on the building. If there is already an insurance policy covering the building, there is no need for you to purchase additional cover for the building. You will only need to insured your own belongings and furniture. In many cases, the building is not fully covered because the owner has a mortgage and insurance only covers the loan amount, not the actual replacement cost of the building.
As stipulated by the Office of Insurance Commission; the foundations and the land are not covered by the insurance policy.
In another case, your 100 million Baht house is only insured for 50 million Baht (Under-insurance).
If your house incurred 10 million Baht damages, the insurance will only pay you 5 million Baht.
This is because you are only insuring 50% of the full value of the house.
The majority of property insurance policies in Thailand include an 80% average clause. This means if your property is insured to at least 80% of the actual value at-the-time-of-loss, the insurance company will pay your claim in full. If your property is insured for an amount less than 80% of the actual value at-the-time-of-loss, the insurance company will apply this ratio to your claim payment. For example; The actual value of your property is 100 million Baht. The sum-insured on the insurance policy is 79 million Baht. If your property incurred a loss of 50 million Baht, the insurance company would pay compensation according to the following formula: 79/100 x 50 = 39.5 million Baht. Your compensation would be short of the actual loss by 10.5 million Baht. If your policy had a sum-insured of at least 80 million Baht, the insurance company would pay the claim in full.
To estimate the insured value of the house, ask the developer or contractor. If the developer/contractor is reluctant to give you the construction cost, you can calculate this yourself.
We don’t have to be exact…………….. an estimate close the actual value (+ / – 10%) is okay.
Add up the total floor area of the house, all floors inside the house. Multiply the total floor area by the construction cost per square meter. This amount is the basic construction cost of the house.
You will have to add furniture, fixtures, appliances and other personal belongings to the total amount.
If you have a swimming pool on the same property; the cost of the pool has to be added. Not everyone includes the pool in their home insurance.
If there is any loss to the property, the insurance company will compensate you after you come to an agreed value by Cheque. You can do anything with this compensation. You don’t have to rebuild the house the same way or repair it to the same condition prior to the claim.
The Office of Insurance Commission, and independent agency operating under the Ministry of Finance, regulates the operation of all insurance companies in Thailand. House and Condominium insurance policies have to follow the guidelines set out by this Insurance commission.
There are two time limits stipulated by the Office of Insurance Commission that you should be aware of, these limits affects all house and condo insurance policies.
- Time limit of 60 days if the house / condo are unoccupied or abandoned without someone to take care of the property. If you intend to leave your home unattendedfor over 60 consecutive days, the policy has to be endorsed by the insurance company to be valid. The home it is not considered abandoned and the policy will not lapse if you….
- Have a security guard service monitoring the home.
- Have a maid looking after the home,
- Have a property management company looking after the home.
- Have a neighbor or friend inspecting the home at regular intervals.
- The 60-day limit only applies to additional benefits of the policy. The main perils are still covered; Fire, Explosion, impact by aircraft or aerial device, Earthquake, Windstorm and building impact.
- Some insurance companies also have an additional abandoned/unoccupied time limit of 7 days for Burglary cover. After 7 days, you have no Burglary cover.
The Office of Insurance Commission also publishes a List of Excluded items from cover. Very few insurance companies will cover some of these items if they are endorsed by the company and included in the insurance policy:
- Cash money, Cheques, coins, bonds, securities, accounting books.
- Credit cards, Bank cards.
- Gold bullion, ornamental gold or precious metals and precious stones.
- Bonds, Certificates, Title deeds.
- Important documents, contracts, obligations, stamps, duty stamps.
- Manuscripts, plans, drawings, designs, patterns, moulds or models.
- Goods held in trust or on commission belonging to others.
- Any antique or works of art.
- Personal effects, watches, glasses, jewelry, Palm/Pocket PCs.
- Notebook computers, cameras, video cameras (With a few insurance companies, this is the only category that you can purchase additional cover against burglary).
There is a big difference between water damage cover and flooding cover.
Water damage only covers loss from the following causes:
- Leaking roof or rainwater into building.
- Bursting or overflowing water tank or water pipes or steam pipes or water pumps or heating systems or air-conditioning systems.
- Leaks into building through windows, window frames, doors, door frames, ventilators, skylights, rain gutters….etc.
Flooding cover includes the following causes:
- Flooding or water leakage through walls, floors, foundations.
- Silt or mud entry and damage to building by excessive rainfall.
Packed home insurance policies provide many different types of benefits in addition to the main perils covered by the policy.
Main perils; Earthquake, Fire, Bush fire, Lightning, Typhoon, Water damage, Hail, Explosion, impact by aircraft or aerial device, Earthquake, Windstorm, Strike, Riot and building impact.
Additional cover; Electrical injury, Burglary, Glass insurance, Debris removal, Professional fees, Landscaping costs, Fire extinguishing costs and Third-party liability cover.
Additional cover is subject to various sub-limits and conditions.
Any time there is a claim, it is the duty of anyone in the home to inform the insurance company ASAP. The insurance company will send a surveyor to assess the damage before repairs are undertaken. If the claim is substantial, the insurance company will usually ask for at least 2 repair quotations before agreeing to repair costs…….so please don’t start the repairs before contacting the insurance company, they need to see the actual damage to your property. Receipts for repairs/replacement items must be official receipts with a tax ID number and name and address (for example: receipts that can be submitted to the revenue department).