The geographical location of the country makes it prone to disasters. In fact, over 68% of the country is vulnerable to earthquakes, 15% is vulnerable to floods, another 10% is vulnerable to cyclones and the complete hilly region is prone to landslides. Recent major disasters cover every part of the country which include floods in Chennai, West Bengal, Bihar, North-East and Kerala, landslides in Kedarnath, Uttarakhand and Himachal, cyclones in Odisha and Andhra Pradesh, earthquakes in Gujarat, Maharashtra, Assam and J&K. In these disasters, property worth billions of dollars have been lost, and in some cases progress worth decades has been wiped out.
With the rise of global warming and changes in weather patterns, the vulnerable zones are only expanding. In the recent floods, waterlogging was recorded in areas beyond the forecasted regions. Similarly, extreme rainfall and cyclones are being experienced in areas unaffected to date. The zone of vulnerability is only increasing and steps to mitigate damages, caused due to disasters, are required to be initiated at the earliest.
Insurance companies provide property security in the backdrop of growing unpredictability. Thus, property insurance forms a significant part of insurance policies today. Below are some of the key types of property insurance that consumers should avail.
House Owners Insurance
This is one of the most widely subscribed type of property insurance in the country, which insures the house owner from financial losses, in case of any untoward incident. It covers the house structure and the contents of the house like appliances, jewelry and furniture, depending upon the type of coverage selected. For the prized possession that a house is, built upon years of hard work, this insurance is not a luxury but a necessity. Three basic levels of coverage exist, based on the requirements of the insurer, actual cash value, replacement cost, and extended replacement cost. The level of customization being offered by insurers is another added advantage that homeowners should definitely avail.
If one is renting a property, then one of the smartest things to do is get renters insurance. This protects the personal property, besides protecting the tenant against liability claims, it also offers an optional clause for additional living expenses. The scenario of a small negligent act by a neighbor or even a delivery agent of leaving the security gate open or leaving a burning cigarette bud can initiate a series of disastrous events. Besides the threat of loss in disasters, the threat of theft is ever increasing. In fact, the value of one’s possessions are realized, only when they are lost or damaged. Hence to avoid regret, it is always wise to insure oneself especially when the premium is as low as in the case of Renters Insurance.
Commercial Property Insurance
As the name suggests, the insurance protects the physical assets of businesses. Two other insurances are generally clubbed with commercial property insurance- general liability and business interruption insurance, to form a more comprehensive insurance. From physical damage to infrastructure to employee liability and theft, a business is vulnerable at every step, hence a wise businessman should know how to protect his assets and reduce liabilities from being created. Based on the risk to business, commercial property insurance is a must.
Natural Disaster Insurance
This forms a part of all other insurances and is generally provided in comprehensive insurance. The threat of cyclones, floods, landslides or earthquakes can destroy everything in their path. This type of insurance is an absolute must and should always be included. The reader would be well advised to read the insurance document carefully to understand all the conditions for which one is insured.
The high cost of land has inevitably meant that every inch of available space is developed. This high density of construction clubbed with inadequate emergency response infrastructure means that fires are generally not controlled early, leading to heavy losses. The threat is multiplying by the day, especially in towns and cities where new heavy-duty electrical appliances are being installed daily. This insurance also covers accidental fires and allied perils like lightning, explosions or implosions, which makes the inclusion of fire insurance in a property coverage a no brainier.
Property insurance is an essential inclusion in the uncertain world today. The unplanned growth clubbed with global warming is leading to a growing number of incidents that threaten to wipe out the hard work of decades. In the uncertain world, the only degree of certainty that is offered by insurance should be availed. The growing flexibility of choosing the insurance package is an additional advantage, thanks to the growing competition in the market.
(By Honeyy Katiyal, Founder of Investors Clinic)