How Do Bali’s Earthquake Insurance Zones Affect Villa Cover?

The first surprise in two otherwise similar Bali villa quotes may be geographical. Indonesia's Financial Services Authority, OJK, divides earthquake property insurance into tariff zones using administrative regencies and municipalities. Table III.D of Annex III to Circular 6/SEOJK.05/2017 assigns Kab. Badung, Kota Denpasar and Kab. Gianyar to Zone IV, while Kab. Buleleng is Zone III. That distinction can change the rate applied to the same insured value even when the villas have matching construction and use.

Those are official administrative units, not popular destination labels. An advertisement referring to Ubud, Canggu or a nearby beach is a poor substitute for the building's recorded address. What ultimately matters to the zoning exercise is the regency or municipality in which the insured property stands. A proposal that uses a marketing location can lead to the wrong zone or an awkward discrepancy between the application and the schedule when a claim is reviewed.

An insurance zone is not a site-specific earthquake forecast. A lower number for Buleleng does not tell a buyer whether its land will experience less shaking than a particular site in Badung, nor whether a building meets appropriate structural standards. BMKG, Indonesia's meteorological and geophysical agency, publishes earthquake shaking-intensity maps and seismic microzonation material for different purposes. Ground conditions, building detailing and disaster preparedness call for their own assessments. None can be inferred from a pricing cell in OJK's annex.

The figures on this page are drawn from the official 2017 circular, effective 1 April 2017, and were rechecked against its published annex on 19 October 2026. As recently as March 2026, OJK was reported to be reviewing potential property-insurance tariff revisions; a comprehensive confirmation ruling out every subsequent applicable change was not available. The model below is therefore identified by its source version, not described as an unconditional October 2026 binding tariff. A new policy needs the insurer to confirm which currently applicable OJK terms govern its quotation.

Areas and zones come from OJK 2017 Table III.D. The comparison rate comes only from Table III.A.2 for occupation 2976 (dwelling house) with a steel, timber or reinforced-concrete structural frame. Rates are in per mille (‰), not percent. Holiday rentals and other building classes must not be priced automatically from this column.

“Villa” describes a property in marketing language, not an insurance occupation. OJK's earthquake-rate schedule makes a clear distinction between dwelling houses classified under occupation code 2976 and commercial or other non-dwelling property. An owner living at the address throughout the year and an operator welcoming a new group of paying guests every few nights are not necessarily presenting the same underwriting risk. The insurer needs the actual use disclosed in the proposal and must confirm the occupation it accepts. Selecting code 2976 simply because the building contains bedrooms is not a sound shortcut.

The second input is the load-bearing frame. For dwelling houses, Table III.A.2 separates buildings with steel, wood or reinforced-concrete frames from “other” construction. The distinction is about the structure itself, rather than a timber ceiling, a concrete-looking facade or the finishes shown in a sales brochure. An as-built drawing, structural specification and photographs may help establish the facts, but the underwriting decision belongs to the insurer. The named frame category should never be read as a certificate of earthquake resistance or evidence that the building was competently built.

In the 2017 dwelling-house schedule, a recognised steel/wood/reinforced-concrete frame carries 1.04‰ in Zone III and 1.35‰ in Zone IV. The corresponding “other construction” cells are 1.55‰ and 2.24‰. The commercial/non-dwelling table is different again: its steel/wood/reinforced-concrete category for buildings up to nine storeys shows 1.00‰ in Zone III and 1.43‰ in Zone IV, while other construction shows 1.55‰ and 2.46‰. A holiday-let operator should not choose whichever row happens to produce a smaller number. Classification and covered use have to be agreed first.

Consider a controlled illustration, not an insurance offer. Both properties are accepted as occupation 2976 dwellings with the specified frame, each with an IDR 5,000,000,000 sum insured for the relevant property. Applying the published Buleleng rate gives IDR 5,000,000,000 × 1.04 / 1,000 = IDR 5,200,000. Using 1.35‰ for the same insured value in Badung, Denpasar or Gianyar gives IDR 6,750,000. The IDR 1,550,000 gap comes solely from two regulatory table cells. No insurer has assessed either hypothetical building, offered those premiums, or agreed that all the property and cover are included at those prices.

A sum insured also needs to be distinguished from a purchase price. A Bali sale or leasehold investment price can reflect land-related rights, location, commercial potential and furnishings alongside the physical building. Insurance valuations may separately address rebuilding the structure, contents, fixed equipment and outdoor improvements. It would be misleading to include the land component in a building-only illustration without first checking the exact insured property. Equally, a lower declared amount is not necessarily a saving: underinsurance provisions can make the insured bear part of an otherwise covered loss.

OJK Section VI recognises full-value and first-loss or sublimit arrangements; if a first-loss amount is used, the full actual value still matters for the declaration. The printed Table III.A rates refer to a specified full-value basis and include the table's business-interruption assumptions with a 12-month indemnity period. That does not establish a guest-revenue benefit under a particular villa contract. Taxes, additional perils, fees, property schedules and insurer underwriting can all change the price finally offered. Use the following inputs only for the published zone–occupation–frame combination that has actually been confirmed.

Illustrative OJK 6/SEOJK.05/2017 tariff multiplication only. Sum insured in IDR millions × rate in ‰ / 1,000 = result in IDR millions. At 5,000 and 1.35‰ the result is IDR 6.75 million (IDR 6,750,000); at 1.04‰ it is IDR 5.20 million. These are not insurer quotes, whole-policy prices or claim estimates. Enter a rate only after occupation, frame and zone are agreed, and confirm the applicable regulatory version and all premium charges in writing.

Earthquake deductibles deserve at least as much attention as the premium. Annex III of the 2017 OJK circular specifies, for a single location and single occupation with total sum insured in the USD 0–100 million band, a deductible of 2.5% of TSI by zone. TSI means total sum insured: the calculation is based on the insured amount, not on a percentage of the cracked walls or the contractor's invoice. That exact formula is attached to the defined table scenario; a multi-location programme, multiple occupations or a separately negotiated contract may use another structure. The policy schedule needs to state the one that applies.

At IDR 5 billion of total sum insured, 2.5% represents IDR 125 million of the insured's own exposure under the specified scenario. Suppose an earthquake produces IDR 80 million of damage accepted by the insurer, with the assets and cause otherwise covered. The accepted amount does not clear the deductible, leaving no payment under this simplified model. A valid policy can still leave a relatively modest repair bill entirely with the owner.

Now change only the accepted damage to IDR 250 million. Subtracting the illustrated IDR 125 million deductible leaves IDR 125 million arithmetically. That is emphatically not a prediction of settlement. Coverage must first be established; the loss adjuster may assess a different amount, and the policy may contain sublimits, excluded property, an underinsurance adjustment or another relevant condition. Under AAUI's publicly available PSAGBI rev UGF wording, proportional underinsurance is calculated before the deductible is applied. A claim can therefore result in less than the headline subtraction, or no payment at all.

The wording also determines how several tremors count as one occurrence. The AAUI rev UGF text contains a 72-hour occurrence clause that groups qualifying events within that window. It could matter when several shocks damage a building, although only the version and endorsements actually incorporated into the contract control the result. A deductible written for flood or another peril cannot be substituted for the earthquake deductible, even when both extensions appear on the same property schedule.

This is why two annual prices without their corresponding deductible bases are not a useful comparison. One proposal may appear inexpensive but leave the owner carrying a substantial slice of every accepted earthquake loss. Another may use a different sum insured, limit or event definition. The amount of uninsured loss should be visible before the owner decides that a slightly lower premium represents a better deal.

“All risks” on a brochure is not the same thing as an earthquake endorsement on a policy. A property contract may cover its standard fire-related perils while reserving earthquake, tsunami and volcanic events for a separately agreed extension. Indonesia has an earthquake policy standard known as PSAGBI. The version currently linked from the General Insurance Association of Indonesia (AAUI) as PSAGBI rev UGF lists earthquake, volcanic eruption, ensuing fire or explosion, tsunami and liquefaction among its insured perils. This is a description of that published wording, not a statement that every insurer or existing Bali villa policy automatically carries all five protections. The actual policy and attached endorsements determine the accepted coverage.

The property schedule is equally important. “Building” can mean the main villa without automatically embracing a pool, boundary wall, retaining structure, gazebo, gates or the contents of guest bedrooms. An insurer may allow some items subject to their own declared values or limits, exclude others, or require specific extensions. In the published PSAGBI rev UGF wording, foundations and certain other property categories are outside the standard cover unless separately stated with an insured amount. A reader cannot resolve those questions from a marketing photograph or the total premium: the physical assets must be identified in the insured-property list.

Rebuilding a damaged villa is not necessarily a new-for-old entitlement. The AAUI wording addresses actual value and depreciation unless different terms are agreed; the insurer's accepted loss may therefore differ from a contractor's price for a redesigned or upgraded building. It also deals with salvage, underinsurance and different settlement methods. OJK permits full-value and first-loss or sublimit structures, but a lower first-loss limit does not remove the need for a credible declaration of the property's underlying actual value. A policy with the same headline sum insured can thus produce a different outcome when the wording, covered assets or valuation clause changes.

Short-stay use is a particularly material question for villa owners and leaseholders. A house insured for private occupancy may later be marketed to guests, operated by a management company or renovated into a different configuration. In the public AAUI PSAGBI rev UGF text, material facts in the proposal and subsequent changes of occupation or construction are expressly addressed. The safer contractual position is to have the insurer accept the real operating arrangement in writing, including who has the insurable interest and whose name appears as insured or loss payee. Holding a long lease does not by itself establish that every part of the building and every beneficiary can be insured on the proposed terms.

Lost booking revenue must be priced and described separately from physical damage. The AAUI standard does not automatically grant business-interruption or other consequential-loss cover in the absence of the specific insured value required by its terms. A rental operator seeking this protection needs a clear insured event, indemnity period, revenue basis and applicable limits. A waiting period should be discussed only if the offered interruption wording actually provides one. Without that extension, a quotation for cracked walls should not be used to estimate compensation for cancelled guest stays.

One public example makes the distinction concrete. PT Asuransi Jasa Tania markets JT Griya as a property product and describes earthquake cover as an additional extension, with a published 2.5%-of-TSI deductible when that extension is taken. Its available application form asks for property details, construction, occupancy-related information and whether earthquake cover is requested; the product page also states its own occupancy requirements. This is evidence of how an insurer documents a product, not a live Bali quote or a recommendation to buy it. Whether that or any other product will accept a tourist villa remains a separate underwriting decision.

The better of two quotes is not necessarily the one with the lower number at the bottom. Imagine Quote A offering earthquake cover on a building alone, while Quote B includes specified contents and outdoor structures but assigns separate limits to them. Both could display IDR 5 billion as the sum insured. If the limits, deductible base, accepted occupancy or property descriptions differ, a direct premium comparison would disguise the very protection the owner is trying to buy. The exercise only becomes meaningful when the insurer is pricing the same risk for the same period on the same agreed basis.

A written quotation should identify the insurer and the proposed insured, the administrative location, actual property use and structural classification. The accompanying policy schedule needs to show each insured item and sum, the earthquake peril or rider, the full-value or first-loss arrangement, sublimits and the deductible with its exact denominator. The complete wording and endorsements identify what is covered, excluded or subject to adjustment. Taxes, fees, start date and end date should be visible alongside the premium. An email saying that “earthquakes are included” cannot do the work of those documents if the eventual schedule is silent.

Insurance relationships around a Bali villa can be more complicated than the title of the person making the enquiry. The policyholder, building owner, long-term leaseholder, operating company and named beneficiary may be different parties. That does not automatically invalidate an application, but the insured interest and any permitted loss-payment arrangements need written agreement. If the villa is refurbished, changes hands or switches from private occupation to nightly letting, documents from the previous year may no longer describe the risk the insurer agreed to take. Updated schedules and endorsements matter just as much at renewal as at first purchase.

Claims preparation is a practical test of whether the proposal is complete. In the published AAUI PSAGBI rev UGF wording, supporting materials include a claims form, policy copy, information about the relevant event from BMKG or PVMBG and other reasonable evidence of loss. Jasa Tania's publicly listed documents provide another product-specific illustration: damage photographs, contractor estimates, receipts and local evidence of the incident. Keep a record of the building's condition and possessions before damage occurs. The applicable claims channel, notice requirements, deadlines, assessment process and current wording must still come from the actual contract; neither public example constitutes a universal list for all insurers.

Before relying on a broker's quotation, the OJK FIND directory can help establish whether the insurer or intermediary is a regulated entity. Regulatory status, however, says nothing by itself about a particular policy's deductible, exclusions or likelihood of payment. If the offered documents cannot establish comparable occupation, assets, limits and terms, the total cost of equivalent earthquake protection remains unknown. A revised written quote on identical assumptions is more useful than ranking two incomplete offers by price.