SGI article at financial express

Nobody can stand out stronger earthquakes: This is how insurance can defend you from financial threats

Nobody can stand out the fierce power of nature and earthquakes are the consequent example. India counts in one of the most vulnerable countries to earthquakes. On the Richter scale recently, Delhi-NCR and other parts of the country suffered a series of earthquakes in small magnitude. According to the experts, Delhi-NCR is in the second-highest seismic hazard zone (Zone IV). And, we can’t deny the fact that the national capital region is highly prone to a stronger earthquake.

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. 

The devastating impact of earthquakes can affect both financially and physically to a person. In such a situation, insurance can be a big relief to the people who are suffering.

This is why insurance is required

Experts always recommend that insurances against calamities such as earthquakes, fires and others must be made mandatory as in the case of motor insurance where third party cover is compulsory for safety purposes in both monetary and physical ways.

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.

Getting the 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.”

News Reference: Financial Express