How not to disturb your finances when calamities strike?

Author:  Mr. Rajiv Kumar, MD & CEO, Universal Sompo General Insurance

(Universal Sompo-  A Joint Venture of Allahabad Bank, Indian Overseas Bank, Karnataka Bank, Dabur Investment Corp and Sompo Japan Nipponkoa Insurance Inc)

“Earthquakes shake North-East Indian regions”, “Floods cripple Chennai,” “Uttarakhand Floods claim 5,700 lives” and many such disasters of grave magnitude have shuddered India over the past couple of years. Apart from dealing with the grief of loss of kith and kin one is also left helpless due to losses and damages to home, office and automobiles.

While newspapers have been rife with anecdotes of government compensation that was directly credited to the victims’ bank accounts, thanks to Jan Dhan bank-account opening drive, one would agree that the compensation would hardly suffice to get life rolling again.

In situations like these, the general insurance product basket help you hold the fort. They protect you from economic and income loss and ensure calamities don’t cripple your finances.

Though in India, there are no separate calamity insurance covers available, you can protect your house and other assets such as shops and vehicles through insurance covers such as Home Insurance, Fire and Special Perils cover, Householder’s Packaged Policy, Motor Insurance and additional or Add-on covers available.

Home insurance policies cover fire, explosion and implosion, earthquake, lightning, storm, cyclone, tempest, tornado, hurricane, flood and inundation, missile testing operation, subsidence, landslides and rockslides. Select policies would also cover you against loss caused due to riot and strike or even volcanic eruption under the special perils cover.

So, when 67-year old Chinnama realised the extent of damage the floods in Chennai had caused to her Adayar residence, only after the water receeded. Had it not been for the home and valuables insurance policy that her son had purchased during his last visit to India, her retirement savings would have been soaked to mend the flood damage.

Fire accidents have gutted innumerable homes and businesses in the past. Shops are often protected as many businesses mandatorily need to be covered. But homes are vulnerable and personal damages aren’t covered, often even by businessman, who cover their office premises. Lest you live in a fire-proof dwelling unit, you should cover your home from the risk of fire accident.

Terrorist attacks or man-made disasters too have been rampant and such acts of terrorism aren’t usually covered under all policies. Hence one should consider a householder’s packaged insurance policy, which would be a comprehensive protection for both the home and the contents such as refrigerator, oven and other appliances, furniture and jewellery. In case of an untoward incident, the insurance company would compensate to the extent of repair costs based on the chosen sum assured.

Calamities often go hand in glove with injuries such as fractures, burns, sometimes disability, but also communicable diseases such as diarrhoea, cholera etc and you are forced to not just bear the damages for loss of assets such as home and vehicles, but also bulky medical bills. A health insurance cover can rescue you from such medical expenses, while the personal accident cover too can reduce the burden depending on the nature of event. Under the personal accident policy, those who wouldn’t be in a position to report to work due to injuries would get an income stream for upto 100-104 weeks.

Trying to start your car or drive in submerged condition may cause a damage to the engine which wouldn’t be covered by the regular mandatory motor insurance policy. But additional riders such as engine protect come to the rescue. Another add-on cover to consider is the zero depreciation cover, wherein the original value of spare part replacement is considered instead of the depreciated value.

Even though these insurance policies come at a meagre cost of Rs 50 per lakh only, a handful of the population has opted for protection under the insurance umbrella. The fact is evident from the share of insurance claims in the overall economic losses caused to the region after any disaster. As per AON Benfield November 2015 Catastrophe Recap report, the total economic losses in India “were estimated to reach as high as INR 200 billion. India’s General Insurance Corporation claims possibly reaching up to INR2 0 billion.” Jammu & Kashmir floods caused Rs 5,700 crore worth of damage, but insurance claims were only to the tune of Rs 1,500 crore.

If you thought, you live in a safe zone and wouldn’t need protection, then the estimates of the National Disaster Management Authority would help. As per NDMA, 57% of Indian landmass is prone to earthquakes, while 76% of the coastline is prone to cyclones and tsunamis.

You can seek solace in the fact that you can protect yourself from possible damage just paying 0.25-0.3% of the benefit amount, also called sum assured in insurance parlance.

It is time to shake the “it-won’t-happen-to-me” syndrome and seek protection for yourself, home and other assets now to avoid resentment later.

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