Fire Insurance Clauses

Based on the Malaysian Revised Fire Tariff (RFT), there are easily 40 clauses available for use in the Fire Insurance Policy. Many queries were raised by Agents as to why Insurers do not voluntary incorporate these clauses into the client's fire insurance policy unless requested in writing.

Honestly speaking, Insurers had nothing to hide from the Agents/Clients, as majority of these Clauses are pre-printed in the policy jacket for all to read. Agents should take the initiative (forget the layman) to refer to the RFT for the relevant Clauses and request be made to incorporate same into the policy when submitting the proposal or renewal to the Insurers. As long as these Clauses are approved by BNM and relevant to the subject matter insured, there are no reasons for Insurers to reject such request.

Technically, there are 3 categories of Clauses that Agents should take note.

1st Category (Premium is charged on inception)

Escalation Clause (to cater to the subsequent appreciation in value of the subject matter)
Public Authority Clause (by topping up the SI to cater to the requiremnent of new building by-laws etc)
Removal of Debris Clause (by topping up the SI to cater to the cost of removing the debris or insured as a separate item)
Architect , Surveyor & Consultant Fees (by topping up the SI to cater to all professional fees incurred or insured as a separate item)
Reinstatement Value Clause (by topping up the SI to cater to further increase in the reconstruction cost)
Contract Price Clause (by topping up the SI to cater to the profit margin for goods manufactured but not delivered)
Outbuildings Clause (by topping up the SI to cater to ancilliaries like fences, gates, guard post etc)


2nd Category (Premium is charged /refundable upon declaration)

Capital Addition Clause with minimum SI RM 1.5Mil (declaration to be made within 3 months)
Stock Declaration Clause (monthly declaration)
Reinstatement Value-Day One (declaration at the end of 12 months)
Internal Removal Clause (retospective from the date of removal or oversight)

3rd Category (Free of Charge)

Other Contents Clause (Limit R1,000)
Designation Clause
Appraisement Clause (5% of SI or RM5,000 the lower of)
Temporary Removal Clause
Temporary Storage Clause (Limit R500,000 up to 60 days)
Alteration & Repair Clause
Mortgagee Clause / Automatic Renewal Clause
Hire Purchase Clause
Computer Systems Records Clause
Vehicle Load Clause

The questions now are:

"What" Clauses should be applied to the Building or to the Machineries or to the stock in trade or across the board etc? and

"Why" these Clauses are so important to the clients? To be continued