Thai House insurance-is this true and legal?

[phitsanulokjohn]

My house insurance was up for renewal.I went to renew it and was greeted with ''we no longer include flood cover as this has cost us too much in the past 2 years''.As it was my 2 properties were insured for 4.5 million,but restricted to 100,000 for flood damage and 100,000 for an earthquake.I said ''ok fair enough i'll take my business elsewhere''to which the reply was ''every company is the same now no ones insuring for flooding''.First is this true and second is this legal?

This got me thinking.Ok i own both properties outright, but what if i didn't, and i'd borrowed say 2.5 million from the bank, and my house was demolished by an earthquake. I would get 100,000, but i'd still owe the bank 2.4million.They could sell the land it once stood on thats worth about 250,000,but i'd still owe the bank 2,150,000.Now hypothetically, me and my family's got no where to live,and with no other assets.How would the bank recover it's 2.15 million?

I've asked many people these questions but can't seem to get an answer.I'd be grateful for any thoughts.

[Hedghog]

Legal for sure.

I doubt anyone would give an insurance policy for flood cover,for any price. Put yourself in the insurance companies position.

Companies in the UK have taken a similar stance in flood prone areas in recent years.

You would owe the bank the money,as you were under insured,if an earthquake demolished a mortgaged house.

Insurance companies have got you buy the short and curlies,with all types of policies.

Unfortunately we dance to their tune.

[CharlieH]

Might be better in the Insurance forum?

It doesnt surprise me one bit, its the sane the world over, if you are in a flood prone area the cover will be restricted, or proportinately higher premium to cover, as with all insurance its about risk factors.

To say nothing of those who have probably milked the system in previous years forcing the government to give hand outs to effected families.

[h90]

I think the insurance which pays 100.000 for flooded home must be between 50.000-100.000 per year.

Because the government is flooding some area every year or second year.

[topt]

As others have said unfortunately it is true. Happened to me just over a year ago when I renewed. This year (now) they (Safety/IAG) have also increased the deductible on the Building for Rain/storm damage to 10% or 10,000 baht whichever is higher from only 3,000 baht previously.

I would consider changing but cannot find equivalent insurance for valuables in the contents part and overall AXA is dearer.

I am considering not bothering but I have always believed peace of mind can be worth a lot more than the cost........when it is not that exorbitant

[BuriramRes]

My only insurance is burlary insurance & for that I installed bars on all windows & also roller doors.

Being friendly with your Thai neighbours is the best insurance, however.

If we flooded here, the whole country would be under.

Edited October 8, 2013 by BuriramRes

[Bcgardener]

Same situation in Australia due to the amount of flood damage that has occurred there. They will no longer cover it but will cover water damage from storms i.e. your roof blows off in a storm and the water gets in. My house in Sydney is only about 1km from the coast and on a plateau about 500 feet high. Need a tidal wave to come even close to flooding the house but the insurance company still won't cover me for floods.

[HUAHIN62]

Acts of God are excluded from insurrance policies as well as civil unrest. You can try AIA they might cover you for floods but I dont think they will cover you for the property value only the damage due to flooding which is normally less than the total property value.

[abrahamzvi]

Legal for sure.

I doubt anyone would give an insurance policy for flood cover,for any price. Put yourself in the insurance companies position.

Companies in the UK have taken a similar stance in flood prone areas in recent years.

You would owe the bank the money,as you were under insured,if an earthquake demolished a mortgaged house.

Insurance companies have got you buy the short and curlies,with all types of policies.

Unfortunately we dance to their tune.

Absolutely legal and most, if not all Insurers, stopped granting flood cover after the floods of 2011. However, some Insurers do grant very limited cover, a limit of Baht 5 to 10 K.

[oneday]

California insurance companies stopped writing polices for earthquake insurance after the Northridge earthquake many years ago. In that case the state government stepped in to offer up insurance at double the premium and a higher deductible.

Seems to me an insurance company can offer whatever they want and not offer whatever they want. They could care less about whether or not you can pay the mortgage or if your house is damaged by some catastrophe they don't cover. I presume the banks have to either get out of the business of offering home loans if no insurance company covers flooding or take the chance and keep offering loans. It's a matter of how far the banks want to take it if you can't pay.

[shaurene]

Ye see your point but, insurance companies can decide what they will insure and it is legal they are not forced to insure. They are there to make a profit out of the business like every other business.

When you insure a property only insure the I building as the land will always be there, this is what the insurance companies love, you have a building worth say, 1.5mill but when you get it valued to sell it the price includes the land so say the land value on your house is 1rmill and your house is worth 1.5mill the total you would insure is 2.5mill. Pay the insurance premium for that amount and then see how much you would save by just insuring the property. If it is destroyed by fire or earthquake the land still belongs to you.

I seen this many years ago and have saved many thousands of dollars in New Zealand and many thousands of pounds the years I lived in UK.

Build a moat around your property with storm drains running the water out.

[Saradoc1972]

[...]

Seems to me an insurance company can offer whatever they want and not offer whatever they want. They could care less about whether or not you can pay the mortgage or if your house is damaged by some catastrophe they don't cover. I presume the banks have to either get out of the business of offering home loans if no insurance company covers flooding or take the chance and keep offering loans. It's a matter of how far the banks want to take it if you can't pay.

Exactly. As long as there is no law saying they have an "obligation to contract" they are as free to enter into a contract with someone else just like you and me. They don't like that business anymore so they leave it, it's their choice.

Obligations to contract are quite rare, most are actually in the insurance business and some work both ways. Examples would be driver's insurance and health insurance in some countries. Obamacare in the US springs to mind.

As to flood coverage, if you ever have been upcountry in rural Thailand or Malaysia note those homes built on 10 foot stakes with the space underneath used for livestock. Smart thinking. Maybe build your next home with only car-ports on ground-level.

[Ulic]

Insurance companies in the US do not have flood insurance. Much to many peoples surprise.

Many think they have coverage. When you ask an agent if you are covered for hurricanes, the

answer is yes. What you are not told is that is for wind damage. Since most hurricane damage

is water related most home owners are shocked to find after the fact they are not covered.

Insurance in available through a separate government program.

[Longtooth]

Same situation in Australia due to the amount of flood damage that has occurred there. They will no longer cover it but will cover water damage from storms i.e. your roof blows off in a storm and the water gets in. My house in Sydney is only about 1km from the coast and on a plateau about 500 feet high. Need a tidal wave to come even close to flooding the house but the insurance company still won't cover me for floods.

Why would you want it then, Noah?

[worgeordie]

My only insurance is burlary insurance & for that I installed bars on all windows & also roller doors.

Being friendly with your Thai neighbours is the best insurance, however.

If we flooded here, the whole country would be under.

Hi BuriramRes, I hope you are able to get out if you have a fire,personally i would

rather have the house burgled ,than have the family and myself end up as charcoal.

just make sure you have an exit.

regards Worgeordie

[USNret]

In California, it's tough to get earthquake insurance. In Tornado Alley, it's expensive to buy tornado insurance.

Insurance companies aren't dumb, and one thing they can do is run numbers. The odds always favor the house. Your analysis is correct as far as loss goes... you lose your house to a flood, you get minimal payoff, you are still responsible for the loan balance, the bank forecloses and fails to recover most of their investment. It's up to them as to whether to come after you for the balance. They would if they think you have the assets to pay them off, and would probably back off if they're pretty sure you have no other money.

[manarak]

the principle of an insurance is that the damage should be unexpected. Building on a major earthquake fault or in a flood plain defeats the purpose.

[ajarnpot]

Basically if you know its going to flood you better get ready with your cheap whisky (meths?) and lighter.

[meatboy]

as in the uk you always insured for more as the cost of a rebuild would be more than what you paid.

when my wf.insured our house [first yr.] cost with land 4.5mil.bht. the bank put the value at 5mil. thats ok.she thought until she went to insure the following yr.this time she went to a broker and to her amazement she told her the most she would get for a rebuild would be 2.2mil.she came away with a fully comp.insurance[flood not covered] for less than half of what she paid previously.

[FiftyTwo]

GF just bought a new house with home loan from SCB.

Insurance from SCB, 6k/year

Damage from

storm, explosion, lightning, aircraft and water (excluding flood) 1M4

Flood damage, earthquake, whirlwind, hail 67k

[Billmont]

We were covered for flooding until our last renewal, Jan. 2013. Just told no flooding cover. I asked for an additional premium for flooding same answer, No Flooding Cover. Our village has not been flooded for a generation and also canals have been cleaned, widened and a dam has been built to restrict run off from the National Park that borders our village. Guess what? Two nights ago the village had flooding, not serious but several houses had a few cm's on the ground floor. The road past our house was a new river but after an hour it was gone, our house was ok. So I guess no place is really safe hence the underwriters new exclusion. Same as medical insurance, make a claim and next renewal that medical problem is excluded. All insurance Companies/Underwriters are in the business to make a profit, any high risks will eventually be excluded just when you think it is "safe to feel secure".

[MMarlow]

The bank probably wouldn't lend on a property that was built in area subject to earthquakes or it would restrict the amount it would lend, therefore reducing it's exposure.

If the bank couldn't recover the amount of the outstanding mortgage from the sale of whatever was left after the destruction of the property it could come to you for it, i.e. the bank would sue you. If you take out a mortgage you are responsible for repaying it.

[Thai at Heart]

Legal for sure.

I doubt anyone would give an insurance policy for flood cover,for any price. Put yourself in the insurance companies position.

Companies in the UK have taken a similar stance in flood prone areas in recent years.

You would owe the bank the money,as you were under insured,if an earthquake demolished a mortgaged house.

Insurance companies have got you buy the short and curlies,with all types of policies.

Unfortunately we dance to their tune.

Of course, it would be solved by people not building in areas that flood....

[Khun Jean]

Getting a quote for an insurance is one part of doing your due diligence.

Areas that are prone to flood are not suited to be build upon.

Prices of land often don't reflect that, exclusion from certain insurances can help valuating the land.

Floods were a natural phenomena, that could be predicted pretty good and risks could be calculated.

Now that people (government) took control of the rivers with dams it is unpredictable and risks are much higher.

So high that insurance companies will exclude it.

If a bank gives you a mortgage for a house that is build in a flood prone area, the bank should assume the risk, and should use a higher interest rate reflecting that risk. Best way to avoid being left with a huge debt is to take the insurance with the same bank. If they can't, that should be a deal breaker. If they are able to offer an insurance, then you can always shop around for a better price.