At Rs 17 a day, protect yourself against acts of God

Some insurers provide structure insurance of up to Rs 2 crore without documentation

The destruction caused by the Nepal earthquake has once again highlighted the helplessness against natural calamities. There is a general perception that insurance doesn't cover earthquakes or other acts of God. This was the case earlier. Today, most standard insurance packages in India provide a cover against the acts of God.

Awareness is key
You may have bought insurance without asking or even considering the possibility of a natural calamity. Or may be unaware that your policy covers natural calamities and not put forward your claims. Awareness is the key to preparedness. For example, did you know that you can insure the structure and content of your house for Rs 20 lakh at as low as Rs 17 per day for an annual plan?

Talk to your insurer if you already have a policy. Check what exclusions your policy has in case of coverage against natural calamities. Increase the coverage against natural calamities if the amount is not sufficient to cover damages.

Scenarios when you are covered against acts of God
Let's look at some of the insurance plans that safeguard us against such natural calamities.

Home insurance: Contrary to popular myth, home insurance is affordable and keeps you insured against both structural and content damages. Insurers offer cover against calamities such as earthquakes and floods. What's more, you can even buy or renew home insurance policy online without any documentation and physical inspection of property, unless you are opting for a specific package or higher sum assured of more than Rs 50 lakh. Insurers such as HDFC ERGO provide structure insurance of up to Rs 2 crore without inspection or documentation.

If you are residing in a multi-storied apartment, find out whether your housing society has insured the physical structure against acts of God. Note that such cover would only take care of the construction cost of the physical structure of your building and, hence, it is imperative for you to opt for an individual cover for insuring your house's contents against potential damages.

You can opt for a structure home insurance plan if you are residing in individual houses or multi-story buildings that are not part of any housing society. Typically, an annual structure insurance plan with Rs 10 lakh sum assured would cost you less than Rs 1,000 per annum.

Fire insurance: While fire insurance can cover your house or shop against damages caused due to fire and some natural occurrences such as storms and flood; a standard fire insurance policy will not protect your abode against earthquake. For this, you might have to opt for an add-on cover. Many insurers provide an option to secure your home against earthquake and even terrorism. A 1200 sq. ft. house can be covered for Rs 13 lakh, by paying Rs 657 per annum (structure only). Note that you may have to buy contents plan should you wish to opt for an add-on cover.

Personal accident: Natural calamities put you at risk of being seriously injured or even disabled. This is where a personal accident cover comes handy. It offers compensation for accidental death, permanent total disablement (loss of two limbs, sight, speech and hearing), permanent partial disablement (loss of an arm, leg, one eye or one ear) and temporary total disablement (fractures in both limbs and temporary blindness). You even have an option to cover minor disabilities such as fractures if you opt for add-on coverage.

Personal accident policies are competitively priced. For example, a personal accident cover by Bharti AXA General Insurance would cost you around Rs 899 for Rs 10 lakh sum assured. In case of partial disability, it will pay anywhere between 2 per cent and 75 per cent of sum assured depending on the level of disability. For permanent disability, it pays you 1.5 times the total sum assured.

Motor insurance: Your vehicle can also be damaged due to natural disasters. Hence, it is imperative for you to buy/renew your motor insurance policy. Note that while third-party liability cover is mandatory as per the Indian court of law, it does not cover damages caused to your own vehicle. Hence, you must opt for a comprehensive cover that takes care of loss or damage due to natural disasters such as earthquake or flood.

You can claim for full sum assured in situations where vehicle has been completely damaged. However, if your vehicle is only partially damaged, you would only be eligible for claiming refund against repair or reinstatement.

Property/shopkeeper's insurance: A property or shopkeeper's insurance plan would extend coverage against Act of God under two components: one, which covers structure and the other which covers both structure and content. Ideally, you must opt for a policy that insures both the structure as well as content.

As in the case of fire insurance, a standard insurance plan would only protect your property against disasters such as storm and tempest and, hence, you may have to opt for an add-on cover to shield your property against an act of God. This may, however, cost you more. The add-on cover will increase your premium by 20-30 per cent. If your shop or property happens to be located in an earthquake prone area, you may have to spend an additional 10 per cent on insurance.

While life is all about taking risks, not insuring or being under-insured is certainly the kind of risk that you might want to avoid.
The writer is CEO , Policybazaar.com