Pay less to save more! Assure you by the fire insurance

The house may not only be the accommodation for the family but also an important investment for many persons. A house may be the largest money in someone’s life. Before owning a house, for normal people like us may have to save some money for many years because there is a down payment, get loans from the bank, decoration, and furnishing. This is large money for many people. Some have to put all life money they have in this house. So, why do not we find insurance to assure this big investment and a home for the family? And how could you let all lifetime money lost in the fire? As the elders said, “10 times robbery is not equal to once a fire”. What if this situation happened to our home without covering insurance and what should we do? So, buying fire insurance for the property is necessary for covering damage and losses caused by fire and reduce loss to our beloved family. 

Did you know that the Thai General Insurance Association statistics show over 2,356 fires each year? The first main cause is from negligence such as from dropping cigarettes after smoking, burning garbage without watching, careless cooking, unmatching fuse for electricity power and broken or not-in-standard electric appliance. The second reason is from an accident such as leakage gas, a sparkling fire, and an explosion. Also, the short-circuit is another reason, especially an older-than-10-years house that most wires are decrepit. Besides, many loads of electric appliances with high power increases the high chance of short-circuiting and quickly spreading the fire. As you can see, all the above causes are in our daily life. Although we think that it can be protected or watched out, but it is impossible 100%. Sometimes we are careful but others do not. This may be the insider or from the neighbor. So, fire insurance is better and surer!     


Types of Coverage


In general, the fire insurance will cover from the 6 main causes which are fire, thunderstorm, explosion, vehicles, airplane, and water (Not include flood, leakage water from basement or external plumbing explosion) or you can add more items such as from disaster (flood, tornado, and earthquake) for your own security. 


What is Covered by Fire Insurance?


The insured property is only building not include basement and/or inside items for living in the property such as built-in furniture or exclude appliances. However, if the damage happens from other reasons, you need to look into the fire insurance policy which is different in each type.  

Is the premium expensive?

The fire insurance premium is identified by the Office of Insurance Commission which is cheap. Most rate is 0.101% of insurance fund plus a fee which are based on location, function, building structure such as wall, structure, and floor, and type of insurance. Also, additional inside preventive and protection equipment installation such as extinguisher or smoke detector will reduce the premium cost.


For example, the insurance fund is 1 million, the premium will be 1,00 Baht per year. However, we suggest you do a long term insurance at least 2 or 3 years because the premium will be cheaper such as one year coverage is 900 Baht per year, but if you do it for 2 years, you pay only 175% of 1 year premium (=1,575 Baht) and 250% for 3 years (=2,250 Baht).    

Who is suited for this? 

Anyone who owns a house or a room especially in the village, townhouse, townhome, and condominium! In case the fire occurs, it will be very complicated if you do not have any fire insurance. If the fire continues to other people's properties, besides losing your own property, you have to pay for theirs too! How could you find the money?   


For a condominium, many people may think that is it the same as condominium insurance? The answer is “no” because the condominium fire insurance that the legal entity did (and collect money from the owner) is only for the common area property. So, your fire insurance is for your own room and property.


How much should you buy?


The fire insurance should cover the value of the house and in-house items, but you should not pay to exceed the value of the house and in-house items. Refer to the compensation policy, the insurer will pay only the actual happening lost but not over the value of the insured property. Assuming that you bought a 2,000,000 Baht house which can be separated to be a 1,000,000 Baht for a house and a 1,000,000 Baht for the area. So, the fire insurance will cover only the house value which is 1,000,000 Baht and does not cover the inside furniture. If the damage happens at only the furniture, you cannot claim the compensation unless you buy the furniture covering insurance.

For example,

• A house insurance fund 1,000,000 Baht
• A furniture covering insurance fund 500,000 Baht
• Total 1,500,000 Baht

You should not buy the insurance at the rate of less than 70% of property value. It is only the fire insurance for property that if the owner does not want to buy a full value of the property but 70% according to the fire insurance criteria which is 700,000 refer from the above example will be covered. So, if the fire happens and the overall property is lost, the insurer will pay the compensation at 700,000 Baht. However, if the owner buys less than 70% of the property value such as 600,000 which is 60% then the fire happens and some of the property is lost. Lost estimation is 300,000 then the owner will receive the compensation only 180,000 (300,000*60%). This is an agreement that the owner has to accept.

Therefore, before buying any fire insurance, you have to understand all detail and conditions. Because fire could happen anywhere, anytime and to anyone. This is not the far-thing from us and if it happens without the insurance, the damage is out of your control. Imagine that your home and all valuable items are lost in the fire and you have no money to build a new one. So, buying insurance will help and support you in case of damage happens. Also, the premium is low compared to the value of your house. Payless to save more!


Reference:

https://www.tgia.org/