Take cover it is Raining
Natural calamities and flood losses have become a regular feature affecting the entire humanity. In India every year the monsoon has shown it’s fury across the country . Mumbai floods of July has become perennial feature. Chennai floods was so bad it looked worse than Tsunami flooding. Even cities like Bangalore gets flooded and thanks to the unplanned urban development complemented with choked drains and encroachment on lakes, ponds and canals. The global warming and resultant climate change is also attributed as one of the reasons for this erratic monsoon behaviour.
Flooding has never been a threat in Kerala, the state soaked in rain for more than half of the year, with many rivers draining excess water into the Arabian Sea. But Kerala also witnessed worst floods and the cause is attributed to heavy rain of 2346 mm from June to August 2018 and also due to opening of many of the dams to avoid spill over and a greater disaster . Before the state could recover from the shock of 2018 floods, 2019 flood also struck in similar pattern in September/October 2019. Going by the past pattern it is to be inferred that it is not a once in a century/decade occurrence, but a phenomenon which has come to stay
While at present the entire focus and action is on containment of Covid 19 and the lockdown, we have lost sight of the time ticking away and steadily approaching monsoon and probable floods. Already the country, States and the people are reeling under the stress and strain of economic slowdown and it is imperative that the loss on account of floods need to be minimised with all available safeguards and planning. Though not to believe in some strong predictions of repeat of last two years, we should be prepared for the imminent possibility.
The South west monsoon is set to arrive from first week of June. The National Disaster Management Authority/ State DMA and various agencies have made plans to handle the adverse impact of floods from the rich experience gained from the past years. The Government must be prepared to have a disaster relief plan including financial compensation package. People think of insurance protection and compensation only when an accident or disaster strikes. The purpose of this article is to educate people to protect their property through insurance .
Kerala floods 2018 resulted in financial losses to the tune of about Rs.40,000 crores and 483 deaths. Out of which only about 10% of the assets were insured. This loss can be reduced to a greater extent if people resort to flood insurance which is available at affordable cost. This will also help the government to direct their limited resources to the deserving down trodden.
There is no standalone insurance cover for flood losses. The Standard Fire and Special Peril policy also covers natural calamities arising out of Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation, Subsidence and Landslide including Rock slide , Earthquake & Tsunami, in addition to the basic cover by fire, Lightning, Explosion, Implosion, Riot & Strike, Malicious Damage, Impact Damage including aerial article falling, & Terrorism.
We shall look into insurance covers under following heads
Industries and manufacturing units,
Commercial establishments, offices, hospitals, Hotels, IT park
Shops, Showrooms, Godowns, warehouses, including stock stored in open
The insurance requirements of the industry, Commerce and business are well taken care of by the risk management/Finance departments and also by the financing institutions. This article is only to guide the common man to protect their dwellings and assets , however few important tips for the commercial establishments are given below
Every year review the sum insured and make sure that the assets are adequately valued to avoid under insurance and proportionate loss in claim ( Under insurance is the extend in percentage of sum insured to the actual value at risk).
Preferably go for reinstatement value policy. Reinstatement is the value required for reinstating the damaged structure as per the current cost. Insuring on market value puts the business to loss in the event of a claim.
Describe the asset location by correct door/ survey numbers. If multiple door/survey numbers are there for the shops and godown all the numbers should appear in the policy lest claim would suffer as fire/Flood policy is location specific. The loss in locations not included in the policy by specific numbers will be construed as not insured.
In most of the claim disputes it is seen the insureds have not studied the policy and all deficiencies, errors and omissions are noted only at the time of claim. Make it a point to study the policy( at least the schedule of insured assets) for every renewal and not to mechanically renew year after year. Make changes in value of assets, addition of new premises, deletion of location given up, change of name of business if any, change of door numbers etc. on renewals.
Get your dwelling and contents insured
The Building/ Apartments- The structure of the house, permanent fixtures, including electrical system and compound wall (specify in the proposal) can be insured. You can insure the building for the current market value or for the reinstatement value which is the value required as on the date of loss to rebuild the damaged structure. If it is financed by bank/home finance take care that the house / apartment is insured for the full value and not restricted to the amount of loan only as it is customary by the financiers. In such case in the event of loss the claim would suffer to the extent of proportion of under insurance. The approximate premium per Rs.one lakh is about Rs.30 /per annum onwards as the rates are not under tariff. So to insure a house valued say Rs.50 lakhs it would cost about Rs.1500 plus GST per annum. There is also provision to cover for a long term policy up to fifteen years with long term discount up to 50%. This means that your property of Rs.50 lakhs can be insured for fifteen years at premium as low as Rs.12,000/. Imagine the great relief and solace considering the affordable premium and the huge value protection. If one is in an housing complex owning an apartment that can be insured separately or the housing society can do it collectively for all the residents. That will be cheaper also. Now the Real Estate Regulatory Act has made Insurance a part of the requirement by the developer and subsequently by the society.
Contents: Household contents include Furniture ,Fixtures ,fittings, Clothing, Apparels, Upholstery, Domestic Appliances, kitchen wares.
In most cases of flood and inundation water enters the houses fully or partly submerging the contents causing substantial loss. During earlier floods also though some houses were insured there was no insurance for contents. The bank and home finance would insure the dwelling only as collateral security for the loan and the contents have to be insured by the residents. The contents can be insured under the head , Furniture, fixtures fittings, Kitchen wares domestic appliances, upholstery, clothing and apparels. The House and the contents can be insured under the same fire policy in two sections, i.e. Section 1. Building, Section 2. Contents. There are also insurance companies offering package policies covering multiple risk like Fire, flood, Burglary, gold Jewellery, breakdown of electrical appliances, television, desktop etc. It is advisable to insure the dwelling separately for long term up to 10/15 years to avail the advantage of premium saving and to avoid break in yearly renewals. . However the contents can be insured only on annual basis as it is the practice in general insurance business. It is recommended to go in for fire and allied policies right now without waiting for the downpour and predicted disaster. Insurance policy is for protecting against unforeseen happenings and insurance companies might refuse to grant protection during apprehensive times ( when the threat is imminent). So why wait, decide and insure immediately.
We can not stop flood and the damages, but can definitely protect our financial loss on the assets we have created with many years of hard work. Protect your dream and live with out nightmare.