When buying a house in the Philippines, fire insurance matters. In a tropical country, fires can become intense, especially during summer when the heat and humidity are most intense.
Between January and March of 2017, the Bureau of Fire Protection responded to 1,217 fire incidents in Metro Manila alone, leaving countless families homeless. Although fire insurance’s purpose self-explanatory, many misconceptions still surround it.
Let’s debunk the most popular ones.
It is mandatory
Most Lancaster New City property reviews would say that many banks require it on housing loan applications, but it’s not really the norm. Many Filipinos don’t have fire insurance mainly because it is often optional and isn’t aggressively marketed. Nevertheless, it’s certainly worth every cent.
It is the same as MRI
Many housing loan applicants confuse fire insurance with Mortgage Redemption Insurance (MRI), but you shouldn’t. MRI serves as life insurance, which protects the lender from loss in case the borrower passes away or becomes totally disabled before the loan matures.
Even if your lender doesn’t require either kind of insurance, it pays to have both for your peace of mind.
It protects against fire-inflicted losses only
In the Philippines, fire insurance also covers Acts of God, such as lighting and flood as well as earthquakes and typhoons. Many fire insurance providers, including Banco de Oro, also offer coverage against property damage due to riots or strikes.
You might also be able to access extended coverage, which would usually include explosion, smoke damage, falling aircraft and vehicle impact. In other words, you wouldn’t have to get other kinds of insurance because it already rolls everything into one.
It covers just the property
Some fire insurance providers offer coverage beyond the property itself. They have policies that include the contents of the property. If you have expensive valuables, like pieces of artwork or electronics, getting a fire insurance policy that covers them is worth the extra charge, if any.
If you’re a foreigner planning to buy a property and retire in the Philippines, understanding fire insurance isn’t the only thing you need to know. Speak with an experienced real estate agent who can assist you with all of your questions, and facilitate the sales process for you.