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The Role of Building Insurance in Natural Disaster Prone Areas

Posted on 1 Oct, 2024

There has been an increase in the frequency and intensity of disasters, majorly stirred up by the impacts of climate change. Cyclones, deadly floods, and earthquakes have become frequent. As we brace for more such calamities, it becomes essential for you to prepare for such unforeseen circumstances by insuring your property and assets. Building insurance is important to protect against catastrophes so that you are at least not left financially stranded when disaster strikes.

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The Importance of Building Insurance in Disaster-Prone Areas

Building insurance is not just your financial safety net; it also gives you peace of mind, knowing that your property is adequately shielded against the damages that may occur from natural calamities. The damages when disasters strike can be overwhelming and require lots of funds to repair or rebuild the place. At this point, building insurance could cover all such expenses and thus lighten the financial burden on you. Especially in high-risk areas, a building insurance policy is important, as it provides necessary protection in case of natural disaster aftermath.

Types of Coverage Offered by Building Insurance

  • Property Insurance

    Property insurance forms the basis of building insurance and covers damage to the structure of your house or commercial premises. It covers all the other important elements of your home or office, such as doors, windows, walls, and roofs. If you live in a disaster-prone area, making sure 'building' is mentioned in your policy is critical.

  • Contents and Stock Coverage

    Apart from the structure, the contents inside the property, like furniture, appliances, raw materials, and finished goods, are equally vulnerable in case of a natural calamity. The content and stock coverage will cover all these items so you can avoid significant losses. Similarly, if you want to safeguard your residential property, it is vital to ensure it covers your belongings, like furniture, lighting fixtures, and electronic gadgets.

  • Additional Coverage

    Most building insurance policies have add-on covers that you can tailor to suit your needs. For instance, an alternative accommodation add-on provides for temporary relocation in case the home becomes inhabitable due to a natural disaster. Other types of protection under this cover may include fire, explosion, and storm damage.

Building Insurance Policy Cover

A building insurance policy will protect your building structure, your home's content, or both, depending on the coverage you select. Damage done to your property because of natural and artificial calamities is covered under this policy. The standard coverage that all insurers provide for this policy are:

  • Fire
  • Lightning
  • Aircraft damages
  • Explosion
  • Storms, cyclones, typhoons, hurricanes, floods, tornados, etc.
  • Rockslide/landslide
  • Water tank/overflows from the tank or pipes
  • Missile test operations
  • Sprinkler leakage
  • Bush fire

What are the Building Insurance Exclusions?

Although many add-ons are available, there are specific situations that are not covered under building insurance. These include:

  • Damages to property that have been deliberately don
  • A manufacturing defect in electrical items
  • Older buildings
  • Routine wear and tear due to regular facility usage is not covered.

Remember that withholding vital information, like the property’s contents, at the time of the policy's issuance can lead to your claim getting denied when the need arises.

Choosing the Right Insurance Policy: Tips and Considerations

Below are important factors that must be considered when selecting a building insurance policy, particularly for disaster-prone areas.

  • Understand your risks. For instance, is your property in an area prone to storms, earthquakes, or floods? Choose a policy offering coverage against those risks.
  • Understand what the policy excludes and limits because these may result in less-than-satisfactory coverage in case a disaster occurs.
  • It is important to tailor-make your policy to suit your needs and not just rest on a standard policy.
  • Review the terms and conditions of your policy time and again to consider your present risks and any change in the circumstances when you initially purchased the plan to ensure your coverage remains relevant and adequate over time.

Conclusion

Natural disasters cannot be prevented, but preparedness can be ensured. Buying comprehensive building insurance will save you from a natural disaster's devastating impact. Your current insurance coverage needs to be evaluated to make necessary changes. Get your residential property or commercial premises adequately insured to avoid being at the mercy of nature.

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This contains only an indication of the cover offered. For complete details on risk factors, terms, conditions, coverages and exclusions, please read the sales brochure carefully before concluding a sale.ICICI trade logo displayed above belongs to ICICI Bank and is used by ICICI Lombard GIC Ltd. under license and Lombard logo belongs to ICICI Lombard GIC Ltd. ICICI Lombard General Insurance Company Limited, ICICI Lombard House, 414, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025. . IRDA Reg.No.115. Toll Free 1800 2666. Fax No – 022 61961323. CIN (L67200MH2000PLC129408). customersupport@iciclombard.com. www.icicilombard.com. (Property Insurance, 1016 , IRDAN115RP0006V01202021)