Insure assets against natural disasters

I have bought a property in western India which was hit by a massive earthquake a few years ago. After the tremors here last week, I want to know what insurance covers I must have to protect me and my family in case of an unexpected disaster.

It is good to hear that you are taking precautionary steps to insure yourself, your family and your valuable assets. It is always better to be well prepared for the unexpected.

Earthquakes are a natural phenomenon, and we live in a relatively safe place. Many expats like yourself, however, own property in other countries where earthquakes are fairly common.

The best step forward is to sit with an expert financial adviser who can help you make an informed choice, list what your priority covers are and tailor a plan to best suit your requirements.

There are different insurance policies available for natural disasters - in this case you are looking for advice against any unfortunate destruction caused by an earthquake.

Since you have a family, you obviously need to have emergency health insurance available should an unfortunate accident occur and require serious medical assistance.

Additionally, if you are the only earning member of the family it is crucial to have a life insurance policy in place - this is important in case of a natural or unexpected tragedy.

The key role of life insurance is to ensure that your financial obligations are covered in the event of your death, so securing a policy should provide you with peace of mind.

Try to determine the policy's overall scope by calculating the two needs that your family will need to cover. You can break these into two areas: immediate cash needs and income needs.

Your family's immediate cash needs are likely to include expenses like funeral costs, any repatriation costs, hospital fees, etc. 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.

Income needs will be determined by how much income your family will need to sustain their lifestyle, and how long the income will be required.

The next step is to evaluate both your homeowner's insurance and home contents insurance policy.

If you have a property, it is important that your home is insured for the 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. "Under insurance" can be a real problem when people find they are not fully covered.

Provisions

You also need to be aware of what exactly the insurance covers you for - are you covered in the event of fire or flood or a natural disaster?

Some policies will contain provisions that enable you and your family to move into comparable accommodation while repairs are being made, which is also highly desirable.

Other questions you need to ask your insurer include carpet replacement, painting costs, additional living expenses assistance, and any loss you may incur from perishable goods if there is a loss of power.

In terms of home contents, your policy should protect household possessions like electronic goods, furniture and your books and CDs.

It's important that your possessions cover is accurate - that it reflects the correct value of the items - when you sign the policy. If you own valuable artwork or antiques, these may need to be insured separately, since all policies will have an upper limit.

There are several other key areas of cover that need to be detailed in your plan - make sure you understand what exactly you can claim under your cover.

The writer is director of general insurance at Nexus, one of the region's leading financial advisers. Views expressed are the author's own and not necessarily reflect those of Gulf News. If you have questions, please email advice@gulfnews.com.