Insurance for earthquake damage in India: There has been a series of earthquakes of small magnitude on the Richter scale recently in Delhi-NCR and other parts of the country.
Insurance for earthquake damage in India: There has been a series of earthquakes of small magnitude on the Richter scale recently in Delhi-NCR and other parts of the country. Experts say that Delhi-NCR is in the second-highest seismic hazard zone (Zone IV). And the possibility of a stronger earthquake in the national capital region cannot be ruled out. The Ministry of Science and Technology has said in an official statement that often a vulnerable zone remains quiet, experiences small magnitude earthquakes which do not indicate any bigger earthquake or receive a sudden jolt by a big earthquake without any call. “Though it cannot be predicted, a stronger earthquake posing a threat to people and properties cannot be ruled out,” the statement said.
From the personal finance perspective, an earthquake can have a devastating impact on an individual’s life – both in terms of monetary losses and physical effects. In such an event, insurance can be of immense help.
Why insurance is required
Experts even suggest that insurance against fires, earthquakes and other such calamities must be made mandatory for housing establishments, just as in the case of motor insurance, where insurance against risk due to a third party is compulsory. Neeraj Prakash, Managing Director – Shriram General Insurance, explains this by saying that an earthquake-prone state like Gujarat ought to have a law that makes property insurance mandatory. He says this will have multiple benefits:
This has multiple benefits:
- survivors of calamities would not have to depend on charity;
- liability-averse insurance companies would offer housing cover only for good structures; this, in turn, would pressure builders to construct top-quality houses/complexes; priceless data on disaster-prone areas/zones would be created.
How to benefit from insurance in case of an earthquake
Neeraj Prakash said that to get the benefit of the earthquake extension coverage in property insurance, the insured must pay an additional premium to the insurance company.
“The extension is granted only if the entire property is one complex, compound or location covered by the Policy. Also, the sum Insured for this extension must be identical to the sum insured against the risk covered under the main policy, except for the value of the plinth and foundations of the building,” he said.
He further said that India, in particular, stands to lose much in the event of an earthquake or other natural disaster. “The economy is thriving; most of its buildings aren’t equipped to withstand an earthquake; the region is seismically active, and the continent is home to 1.3 billion people—a sizeable chunk of the world’s population.”