Insurance against natural disasters

The current floods in Pakistan have had a devastating effect on people, their livelihood and property. I am in the process of buying a property in my home town of Lahore which some of my family may move into, and I would like to know what insurance I need to protect my investment and my family from harm if such flooding ever happens again.

Many expatriates living in the UAE come from countries where flooding, hurricanes and tropical storms are an annual occurrence. However, it is easy to forget about these dangers when living in the UAE where natural disasters are uncommon and the events in Pakistan will serve as a stark reminder to all with investments overseas that it is wise to have financial protection.

In terms of insurance there are many different policies available for natural disasters, covering a variety of possible scenarios such as damage and destruction of a property and the physical harm or death of a family member.

Speaking to an independent financial advisor will ensure that you receive the best advice on all these areas, putting your mind at ease over any future natural disasters.

Damage to property is one of the main concerns when it comes to flooding, and as you are in the process of buying a property in Lahore the first thing you need to do is to make sure you obtain both homeowner's insurance and home contents insurance.

Underinsurance can be a real problem when people find they are not fully covered, so make sure that the insurance you take out is for actual replacement cost — the cost of rebuilding the house and replacing the permanent fixtures and contents — rather than just the market value of the house.

Provisions

You also need to make sure that the policy specifically covers a natural disaster and not just flooding from faulty plumbing. Policies often contain provisions for you and your family to move into comparable accommodation, while repairs are being made. Carpet replacement, painting costs, additional living expenses assistance, may also be included.

Insuring your home contents is also a wise move. Possessions such as electronic goods, furniture, books and CDs can all be expensive to replace so make sure the cover you have is accurate and reflects the correct value of the items.

More important than you property, however, is the safety of your family — what would happen if any harm came to them during another flood?

Top of your list, if you haven't already got it, is emergency health insurance. You may want to ensure that medical evacuation is included on the policy so that you are covered if someone needs to be airlifted out of the country and back to the UAE for treatment.

If the only earning member of your family in Pakistan is harmed or loses their life during a natural disaster then a life insurance policy can make a very difficult time that little bit easier, as it will mean that the rest of your family will be financially protected. Working out the amount needed to be covered by a life insurance policy requires careful calculation of the appropriate sum assured including cash needs incurable by expenses such as funeral costs, repatriation costs and hospital charges.

You might also want to make sure there is an emergency fund to cover rent, school fees and the costs of covering any debts or liabilities. The income needs of your family must also be included, taking into account how much and how long the income will be required.

The writer is Director-General Insurance, Nexus Insurance Brokers LLC. Opinion expressed are the writer's own. If you have any questions, please email advice@gulfnews.com