Unless you pay cash for your home, one of the requirements that will be made by your lender is proof of a valid homeowners insurance policy,to be secured before closing. This policy will protect both your investment as well as the lender's.

What do Policies Protect Against?

Casualty: The most common hazard insured against, of course, is damage due to fire. A homeowner's policy may cover losses due to other hazards but it is important that you determine precisely what is - and is not - insured against. If your home is built in a flood-prone area, you must secure a separate flood policy.

Liability: This is to protect you against lawsuits resulting from injuries that occur to visitors or guests in your home. The cost of this coverage, to a large degree is based on the limits of coverage. Secure as much as possible in order to protect your assets.

Personal Property: While the casualty or hazard insurance covers the rebuilding of the house structure, personal property coverage protects what is inside the home. Coverage here will vary widely, so it is important to be clear on exactly what the limits of the coverage are. Check, for example whether, it covers replacement cost of an item or the value determined through its original cost or depreciation.

Saving Money on Homeowners Insurance

The price you pay for your homeowners insurance can vary by hundreds of ringgit depending on the company you buy your policy from. The amount that you need to pay correlates with the risk factors and security reliability of your home. This is why you should ask your agent or company representative about any discounts available to you and the recommendation on risks in order to get a better pricing.


Shop Around Consult your friends, family, the phone book and experts in insurance. Get a wide range of prices and coverage from several insurance companies. But do not consider price alone. The insurer you select should offer both fair price and excellent service. Quality service may cost a bit more, but you buy insurance in case you need to make a claim, so it is important to get a company with a good reputation. Talk to a number of insurers to get an idea of the type of service they give. Ask them what they would do to lower your costs.

Raise your Deductible Deductibles are the amount of money you have to pay towards a loss before your insurance company starts to pay.
Buy Your Home & Auto Policies from the Same Insurer Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them.

When you buy a Home...

• Consider how much insuring it will cost. A new home's electrical, heating and plumbing systems and overall structure are likely to be in better shape than those of an older house. Insurers may offer you a discount of 8 to 15 percent if your house is new.
  
  
• Check the home's construction. Choosing wisely could cut your premium by 5 to 15 percent.
  
  
• Avoiding areas that are prone to floods can save you about RM 200 or more a year for flood insurance. Homeowners insurance does not cover flood-related damage.
  
  
• The closer your house is to firefighters and their equipment, the lower your premium will be. Insure your house, not the land. The land under your house is not at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So do not include its value in deciding how much homeowners insurance to buy. If you do, you will pay a higher premium than you really need to. 
  
  
• Improve your home security and safety. You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm, or dead-bolt locks. Some companies offer to cut your premium by as much as 15 to 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police station or other monitoring facility. These systems are not cheap and not every system qualifies for the discount. Before you buy such a system, find out what kind your insurer recommends and how much the device would cost and how much you would save on premiums.
  
  
• Stop smoking. Smoking accounts for more than 23,000 residential fires a year. That is why some insurers offer to reduce premiums if all the residents in a house do not smoke. 
  
  
• Seek out discounts for seniors. Retired people stay at home more and spot fires sooner than working people and have more time for maintaining their homes. If you are at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies.
  
  
• See if you can get group coverage. Alumni and business associations often work out an insurance package with an insurance company, which includes a discount for association members. Ask your association's director if an insurer is offering a discount on homeowners insurance to you and your fellow graduates or colleagues.
  
  
• Stay with an insurer ... If you have kept your coverage with a company for several years, you may receive special consideration. Several insurers will reduce their premiums by 5 percent if you stay with them for 3 to 5 years; by 10 percent if you remain a policyholder for 6 years or more.
  
  
• Compare the limits in your policy to the value of your possessions at least once a year. You want your policy to cover any major purchases or additions to your home. But you do not want to spend money for coverage you do not need.