Filipinos are known to be a fatalist lot, believing that what will be, will be, and that somehow things will work themselves out.
But they don’t always do, as many homeowners, entrepreneurs and large corporations have learned the hard and very expensive way.
Because of major events beyond their control – including fire, robbery, theft, lightning, flood and earthquake – people can lose everything they own.
Having property insurance, however, offers significant relief as the people affected can get the much needed funds to rebuild and start over.
According to Armand Pesigan, Property and Engineering Head of Pioneer Insurance and Surety Corp., property insurance policies typically cover damage to property – such as buildings and their contents – caused by fire or lighting.
For example, if fire in a neighbor’s house spreads to your house and damages the kitchen, you can then file a claim with the insurance company, which will assess the extent of the damage and the cost of repair. Or, if the electrical system overloads and causes the house or building to go up in flames, insurance claims can also be filed.
“The claims process can vary from company to company, but it always begins with the client immediately informing the insurer,” says Pesigan. “In general, to file a claim, one should be able to demonstrate the extent of the damage to the property. Adjusters act as a third party in evaluating this damage.”
Celestino Ang, senior vice president of Prudential Guarantee and Assurance Inc., however, stresses that the typical property insurance only covers the building or structure and typical contents, such as furniture and household appliances. It does not ordinarily cover more valuable items, such as designer watches, jewelry, antiques, paintings, sculpture and memorabilia.
Ang says that coverage for these items will have to be undertaken separately and will require an additional annual premium, in the same way that protection against “Acts of God” – typhoons, floods and earthquakes, for example – will likewise entail additional payment.
Property owners will also have to pay additional premium to cover loss of property due to robbery and burglary. Robbery is defined in insurance terms as force upon person – like when a person holds a gun to your head and demands that you hand over your possessions – while burglary is force upon objects – such as when thieves break into and make off with the contents of an empty office or house.
Extra coverage will mean an additional 0.1 percent of the value of the property, although the actual percentage may vary depending on the location of the house or building, and the peace and order situation in that area. This is why insurance cover against robbery and burglary will be cheaper in Forbes Park, Makati than in Tondo, Manila.
Ang estimates that a typical insurance premium costs about 0.1 percent of the declared property value, so if a building costs P1 million, the annual premium would be P1,000. The same holds true for the contents, which will require a premium of about 0.1 percent of the declared value. Additional cover will now depend on the insurance company, although rates typically range from 0.09 percent to 0.35 percent of the total insured value.
For condominium units, the required premium goes up to about 0.168 percent of the declared value, although this can be reduced depending on the available safety features of the condominium, such as fire alarms and working sprinkler systems.
Ang stresses the importance of declaring the real value of the property to be covered to make sure that in case of damage to it, the insurance buyers will get the full amount needed to rebuild the damaged asset.
He explains that in many cases, property owners get insurance cover equivalent to only a fraction of the value of the property. Thus, when disaster strikes, they cannot get enough money from the insurance company to get back on their feet.
In their desire to save on the annual premiums, some property owners end up paying much more in case of misfortune.
Perhaps it is this belief that nothing untoward can possibly happen that explains why only a small percentage of Filipinos have property insurance – about 20 percent – and they are often only forced to get insurance because it is required by the bank that extended them a home loan.
“While specific numbers aren’t immediately available, a quick look at Insurance Commission statistics seems to indicate that many of our countrymen still do not have property cover,” says Pesigan.
“There continues to be a lack of insurance consciousness among the public. This, coupled with the stringent requirements, makes it even more difficult for those who need the protection to avail themselves of it,” he adds. “The purchase of property insurance is also driven by the requirement of lending institutions, so it’s possible that many continue to view insurance as an added expense rather than a safety net.”
And a safety net is what all property owners need, especially since losing everything to disasters – both manmade and natural – is always a possibility. It’s remote, yes, but there’s always that one in a million chance of it happening to you.
With property insurance, Pesigan says home and business owners get the process of repair or reconstruction moving faster.
“As in the case of all forms of insurance, property cover helps provide long term financial stability by addressing the financial recovery from the loss of property,” he adds.
In choosing an insurance company, consider the company’s track record in making good on its promise to cover property as well as ease in validating and processing the insurance claim, Pesigan advises.
Pioneer, he says, offers competitive rates, a comprehensive product range and a nationwide presence.
“We feel we offer superior value in the way we treat the claims process – we believe that insurance is most needed when a client suffers a loss and so we do our best to ensure that claims are settled as quickly as possible,” Pesigan says.
Prudential is likewise proud of its enduring presence in the industry and considers it its responsibility to encourage more Filipinos to take out vital property insurance.
As Ang says, the price of the annual cover is minute compared to what the home or business owners will have to shell out if and when disaster strikes.