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An expert’s advice: A veteran in the general insurance industry for over 28 years, Danny Ban is also a Registered Financial Planning lecturer. We are blessed to have him on a special interview series to share on the types of general insurance and what we ought to know before purchasing them. We will have 2 parts for this session of Expert’s Advice.
In Part 1, we will be covering these topics:
- What are the major difference between life insurance and general insurance when we purchase a property?
- What are the types of general insurance for property? And how is the claim process like?
- What are the type of business insurance for people who are running their own businesses?
- As businesses are bind by law, how is the claim process like? Does it take longer than usual?
Property Insurance: Life vs General Insurance
Q: When we purchase a property, we usually need to buy a life insurance and general insurance. However, we do get confused between these two. Can you share with us what are the major difference between these 2 types of insurance for property?
A: As far as property is concerned, for residential property, the life insurance plays a part in insuring the purchaser should there be any death or disability. Life insurance will be used to settle the outstanding mortgage loan for their property. On the other hand, in terms of general insurance, houseowner insurance will cover the property from major disaster such as fire, burglary, theft, flood, windstorm and etc.
Property Insurance: What are the types of general insurance?
Q: So in terms of general insurance for property, what are the available plans that public can choose from and what would you advise?
A: For residential property, they have an option to get houseowner or household insurance. Houseowner insurance will cover the property building while household insurance will cover the contents inside the property for fire and theft.
Q: Is there any other general insurance for property that the public should buy?
A: For commercial property, they can choose to buy fire insurance instead of houseowner insurance whereby they can add in an additional benefit of “Public Liability”. In case any third party individual suffers any injury in their premise and sue the owner for negligence, this “Public Liability” will cover the costs.
Property Insurance: How is the claim process like?
Q: How is the claim process for general insurance in relation to property?
A: For residential property, if the claim is low (RM 2,000 – RM 3,000), the owner just need to submit receipts and invoices to the company. However, they must remember to inform the company on the losses. For any larger amount of claim, the company will need to send an adjuster to assess the losses.
Business Insurance: What are the types of available plans?
Q: Moving on to the 2nd topic, related to business. What are the type of business insurance would you advise them to get when they are running their own businesses?
A: There are several types of insurance for business premises, depending on the type of premise. Let’s say for commercial premises like shoplots, fire insurance and burglary insurance will be advisable to purchase. Fire insurance will cover fire perils, storm, flood and etc. Burglary insurance will cover theft. As for factories, aside from protecting the factory building, they should also protect their machineries and finished goods. Therefore, it is advisable to get an additional insurance, “Machinery all risks”.
Business owners can also choose to extend their insurance coverage by getting “Public liability” insurance to cover any injuries suffered by third party in their premises. As for professional body such as as lawyers, doctors and engineers, besides protecting their office premise from fire and burglary, they must get one very important coverage which is “Professional Indemnity”. In case of any negligence on their part in which their clients may sue them, this insurance will cover all losses including lawyer fees.
Business Insurance: How is the claim process like?
Q: Because businesses are bigger and more legalized compared to private property, how is the claim process like? Is it more complicated?
A: Yes, it is. Again, for factories, an adjustor will be sent to assess the losses. As for professional indemnity insurance, a legal suit must be involved to be able to claim.
Q: How long does the claim process take?
A: It will be long for professional indemnity as it involves court case. It can stretch up to 2 to 3 years.
Host: Alright guys, so that was a very informational answers from our guest speaker today. We will come back for Part 2!
Life insurance and general insurance are two very different type of insurance. As many of us prioritize life insurance due to the increasing medical cost and awareness in society, we must not neglect the importance of general insurance. Do review your current portfolio and ensure if your property building and contents are well insured in case of any unfortunate events. As for professionals, ensure that you protect yourself with professional indemnity as law suits can cost you a fortune!
Do follow us for Part 2 where we will talk about Travel Insurance and Car Insurance!
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