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Sunday, May 10, 2015

Take cover against disasters




You can't stop calamities but you can minimize their impact on your finances
It has taken a devastating earth quake to shake homeowners in In dia out of their slumber. Seeing the trauma and destruction in Nepal, everyone wants to know whether they can insure homes against earthquakes and how much would it cost.

Very few people take home insurance in India. "Even though it is very cheap, less than 1% of people who can afford home insurance actually buy this cover," says Tapan Singhel, Managing Director and CEO, Bajaj Allianz General Insurance Company .

This is surprising because India is disaster-prone. As much as 30% of the Indian landmass is prone to earthquakes of severe intensity. Another 27% is prone to moderate earthquakes.Nearly 12% of India is prone to floods and 76% of its coastline is prone to cyclones and tsunamis. "Even if someone buys home insurance, it is for a very short tenure. There is a greater need to buy a cover against disasters," says K.K. Mishra, Managing Director and CEO, Tata-AIG General Insurance.

How much it costs

A 1,500 sq ft house can be covered for `50 lakh against fire and other perils for less than `1,700 a year. If contents worth `10 lakh are included, the cost will go up by `400. You don't need to take a cover for the market value of the property but only for reconstructing it.Construction costs vary from `1,000 per sq ft for a no-frills structure to almost `3,000 per sq ft for premium.

Some companies offer discounts if you buy a comprehensive policy with additional coverage. We like the Householder Policy from Oriental Insurance that offers an array of 10 covers and gives discounts to buyers who tick on more than four. The policy covers nearly all the risks that your house and valuables are exposed to. A basic cover of `50 lakh for the building and `10 lakh for the contents is as cheap as `2,100 a year (see table). It can be bought online, though you might have to spend 40-50 minutes on drawing up an inventory of the items you need to cover.

As the cost of reconstruction keeps rising, you might have to increase the insured amount every few years. Some insurers offer discounts if you take a multi-year policy . If the premium for a `50 lakh cover is `3,800 a year, it will be 18% lower at `15,590 if you buy a fiveyear policy . If the escalation of rebuilding costs is a worry , HDFC Ergo has a policy where the sum assured goes up every year. The basic insurance cover rises 10% every year. The premium of the escalation option is higher at `19,100 compared to `15,590 charged for a normal `50 lakh cover for five years.

What gets covered

While all home insurance policies offer cover against earthquakes, some insur ers have a compulsory 5% deductible in case of damage due to an "act of God". An act of God is any event, especially a natural disaster, for which no individual can be held responsible. The deductible means that if your house is insured for `50 lakh, and it suffers a damage worth `20 lakh, the first 5% of the claimed amount (or `1 lakh) will be borne by you. Some insurers don't even have such deductibles. "Policies covering individual residences or dwellings with individual owners do not have compulsory deductibles. However, policies covering housing societies are subject to deductibles depending on the sum insured," says Subrahmanyam B, Head, Health & Commercial Underwriting, Product Development and Reinsurance, Bharti AXA General Insurance.

In some policies, this deductible can be customised. Raise the deductible, and the premium goes down.

What is not covered

While you can cover the contents of the house against damage and theft, some valuables are not covered. Cash, documents, share certificates and debit or credit cards are not included. Jewellery and other valuables are covered, but subject to ceilings. Some policies specify that the cover for jewellery will not exceed 25% of the total contents insurance cover sum insured or `1 lakh, whichever is lower. The individual responsible for the theft is also critical to the claim getting passed. "If the contents have been stolen by a relative or a household help your claim will not be admitted," says financial planner Pankaj Mathpal. When covering appliances and gadgets, ascertain the cost of replacing the item. An item is insured for its market value after depreciation. The insurance company will pay the amount required to restore an item to the condition it was in before damage.Simply put, a refrigerator or an airconditioner might have cost you `40,000 about five years ago, but its depreciated value will now be Rs 20,000-22,000.








Sunday, April 26, 2015

A HIMALAYAN TRAGEDY




7.9-Intensity Quake Nepal's Worst in 81 Years Heritage Structures Flattened IAF Evacuates Over 300

Cross-Border Trauma Kills Over 1,500

A powerful 7.9magnitude earthquake epicentred near Kathmandu ripped through the upper part of the South Asian peninsula on Saturday , rattling the landscape from Myanmar to Punjab, leaving more than 1,500 dead and thousands injured in Nepal alone and flattening cities and towns. As rescue operations, mostly aided by Indian armed forces, were mounted in the Himalayan foothills, the toll in In dia crossed 50.

Nepalese police spokesman Kamal Singh Bam said the quake, with its epicentre around 80km from the resort town of Pokhra and 200km west of Kathmandu, was Nepal's worst since 1934. It was close to the earth's surface, making it deadlier than those which convulse the earth deeper down.

The temblor began rumbling across the densely populated Kathmandu Valley around noon before spreading toward the Himalayas, Tibet, northern and eastern India, Bangladesh and eastern Pakistan. While two deaths were reported from Bangladesh, agencies said at least 12 people were killed in Tibet.No casualties were reported from Myanmar or Bhutan. "The Himalayan tectonics underneath are really writhing, so many shocks one after another. Aftershocks is a misnomer,'' tweeted Nepalese writer Kanak Mani Dixit.

Himalayan Times editorial adviser Joseph Nathan said tremors were on at 9pm but were getting milder. "Fear has gripped Kathmandu and people are all out in the streets and open areas for fear of another round of major tremors.It is dark and chilly , with no power, rather total blackout, no piped gas supply and no water supply,'' he said.

"The biggest worry in the city now is about the sanitation problem that is going to hit by tomorrow (Sunday) morning. Even the big hotels which have piped gas supply are without it.'' PM Narendra Modi, in remarks made at the Jnanpith Award ceremony , said India's 1.2 billion people shared Nepal's grief and were with them in this hour of need. The first IAF rescue aircraft landed at Palam around 10.40pm on Saturday with 55 on board, including four infants. BJP's M J Akbar, who was among the evacuees, said the situation in Nepal was "scary". Two more IAF planes with over 250 Indians were expected later in the night.

As the convulsions subsided and the dust cleared, what emerged was a battered Kathmandu. The city's biggest tourist draw, Durbar Square, was a pile of bricks with a few temples standing.

Nathan said surprisingly the new buildings survived better than the old constructions. "...200 to 300 year old temples have been reduced to the ground." The 1832-built Dharahara tower, built as a viewing post for Nepal's queen, was reduced to a 10m stump. TV visuals showed clouds of dust swirling as panicked residents ran out of homes and buildings while walls tumbled, trees swayed and power lines came crashing down. Around 200 people, who had climbed the 60-metre Dharahara to get a bird's eye view of the Valley, were buried under the debris. Several bodies were extracted from the rubble of the landmark.

The casualties among tourists were not clear as the dead had not been counted or identified. But the numbers could be high given around 300,000 foreign tourists are estimated to be in Nepal for the trekking and climbing as the season opened.

The quake left large cracks on streets, craters pock-marking the ground, collapsed walls, broken windows and fallen poles along with streets filled with harried survivors. The first aftershock — magnitude 6.6 — hit about an hour after the big quake.

Reports said isolated mountainous areas in Nepal were badly hit. But the extent of the damage was unclear due to inaccessibility and breakdown of communications that hampered relief efforts as well. Many remote villages were feared to have been almost wiped out as houses there were either buried by landslide or damaged by shaking near the epicenter.

"Over large parts of rural Nepal, houses built with mud mortar are down. Glad it's not winter & not yet monsoon,'' tweeted author Kanak Mani Dixit. "Don't know enough about Bhaktapur. From the Valley rim my brother saw a pall of dust rise over Bhaktapur.

I think it has been badly hit.'' Rain and thunderstorms were forecasted for Saturday night and Sunday adding to rescue concerns and the woes of homeless survivors. A news agency quoted an Indian tourist saying she was having coffee with her friends in Kathmandu when "suddenly the tables started trembling and paintings on the wall fell on the ground''.

She added they screamed and rushed outside and were collecting bodies and rushing the injured to hospitals. "We are being forced to pile several bodies one above the other to fit them in." The tourist said she saw three bodies of monks trapped in debris of a collapsed building near a monastery. "We are trying to pull the bodies out and look for anyone who is trapped."

"Saddest was to stand on the mound of what used to be the Dharahara landmark tower, and see the citizens, police and army pull the bodies out,'' tweeted Dixit. Hospitals in Kathmandu were teeming with wounded with mostly broken limbs. Volunteers formed human chains to clear the way for ambulances




Akbar Badruddin Jiwani  
Mobile: 09323500008
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