Propery Insurance

[siddv]

Can someone enlighten me on the issue of property insurance? I'm completing the purchase of a 2.5 mil bht single family residence outside of BKK and could use some info. I have been told by some that at the time of sale a 30yr term insurance policy is purchased but the price seems too small for this legnth of coverage 10K-12K bht total for the 30 years? Anyways thanks in advance.

[astral]

I am not sure why you should need a 30 year insurance policy,

even if you can find a company offering one.

You do need insurance for the property itself

and the contents.

There are several local companies that off comprehensive policies.

[Sulaphat]

Property insurance policies issued in Thailand have a policy period of 1 year.

If you are borrowing money from a bank, you may be required to take out a property insurance policy from the bank's nominated insurance company and maintain the policy until the loan is paid off. If you have a 30 year mortgage, this means that you will need to take out insurance on the property at the time of the loan and renew the policy each year for 30 years.

One thing to watch for: The banks sometimes require that the insurance policy be taken out for the amount of the loan. This can create a problem with underinsurance. The policy needs to be taken out for an amount equivalent to the current cost to replace the property (excluding the cost of land) if it is totally destroyed. If insured for less than this amount, you may collect only a portion of your loss, even if the loss is less than total. This is due to the "Average Clause" which in effect makes you a co-insurer of the property if it is not insured for the full value. You'll want to update your amount of insurance from time to time to keep up with inflation and increases in construction costs.

An annual property insurance premium on a dwelling worth baht 2.5 million should be somewhere in the range of baht 2,500, although it may be a bit more expensive if the insurer follows the published tariff rates from the Department of Insurance. Contents cover may be more expensive.

Good luck.

S.

Edited September 9, 2006 by Sulaphat