House and fire insurance in the Philippines

House insurance in the Philippines usually starts with a fire policy. Cover for typhoon, flood and earthquake is often added to it as an extension, or bought as a separate policy. The Insurance Code says fire insurance includes loss by “fire, lightning, windstorm, tornado or earthquake and other allied risks, when such risks are covered by extension to fire insurance policies or under separate policies” (Sec. 169). So these perils are covered only if your policy says so.

Building and contents

• The building is the structure: walls, roof, floors and fixed fittings.
• The contents are what is inside: furniture, appliances and personal things. They are often insured separately, with their own amount.
• The sum insured is the amount you insure for. It should be what it would cost to rebuild or replace, which can be quite different from the market price of the house and lot.
• Insuring for too much usually does not get you more, because most policies pay your actual loss. If several insurers together insure the property for more than its insurable value, the law gives a ratable return of the premium (Insurance Code Sec. 83). With two or more policies on the same property, you can claim from the insurers in the order you choose, up to what each is liable for, and the insurers share the loss between them (Sec. 96).
• Insuring for too little. If the sum insured is below the real value, a big loss will not be fully paid. Many policies also reduce partial claims in proportion when the property is under-insured. Check the policy wording for this.
• A deductible is the part of each claim you pay yourself. Natural peril extensions often have a higher deductible than fire.

When the policy does not fix the value in advance, what is paid for a fire is what it would cost to replace what was lost, in the condition it was in when the fire started (Sec. 173). So age and wear are taken into account.

Natural perils

Check each of these in the policy wording, because each is added or left out on its own:

• Typhoon and windstorm: damage from strong wind and the rain that comes with it.
• Flood: water rising from rivers, the sea or drainage. Often separate from typhoon cover.
• Earthquake: shaking, and sometimes fire that follows an earthquake.
• Volcanic eruption: some policies list it, others do not.

Read the exclusions and the deductible for each peril you add.

Insurance a housing loan needs

Lenders usually require fire insurance on a house they lend against. For Pag-IBIG housing loans, Pag-IBIG states that the loan “shall be covered by a Mortgage Redemption Insurance (MRI) or a Sales Redemption Insurance (SRI), whichever is applicable, as well as a Fire and Allied Perils Insurance (FAPI)”. MRI or SRI pays off the loan if the borrower dies; fire and allied perils insurance covers the house. See the Pag-IBIG housing loan guide for OFWs.

Ask the lender how the amount of fire insurance on the loan is set, how much of the house’s value it covers, and whether your contents are included.

Making a claim

The usual steps, in general:

1. Keep everyone safe, then stop further damage where you can (for example, cover a broken roof).
2. Tell the insurer, or for a Pag-IBIG housing loan, Pag-IBIG, as soon as you can. Pag-IBIG asks for non-life housing insurance claims to be filed within six months of the event.
3. Take photos and videos of the damage before repairs.
4. Gather papers: the policy, a report from the fire department or the barangay where needed, repair estimates and receipts.
5. Keep damaged items until the insurer’s adjuster has seen them, unless told otherwise.

Owning a home while abroad

If you work abroad and own a house at home:

• Name a contact person in the Philippines who can report a loss and meet the adjuster, and give them a copy of the policy.
• Keep photos and receipts of the house and its contents, stored online so you can reach them from abroad.
• Tell the insurer if the house is empty for long periods or is rented out. Where the policy limits how the house may be used, a change in its use or condition that increases the risk, made without the insurer’s consent, lets the insurer rescind the policy (Insurance Code Sec. 170).
• Check the renewal date each year, so the cover does not lapse while you are away.

For cover for injuries rather than property, see personal accident insurance.

This page explains how house and fire insurance generally works. It does not describe any company’s product.