Tuesday, February 3, 2009

Natural Disasters vs Typical Home Insurance Policy

Whenever we go to buy homeowner insurance policy, the agent would say that their “special” and “different from other” insurance policy would pay for any type of damage that our home will experience. But reality is that many home owners or property owners their homeowners insurance policy will not pay them a single penny if their homes or property are damaged by some common natural disasters like floods, landslides and earthquakes. It’s a general tendency that whenever we buy an insurance policy, we just go by agent’s words but most of us never go through all the policies. You’ll find many people around you who are not able to collect when their homes are damaged by floods, landslides, subsidence and other problems and we think that insurance companies are cheating their customers.

If we’ll spend a little time reading the policies, we’ll clearly come across “Exclusion Statement” of policy. This “Exclusion Statement” of policy clearly states that the insurance company would not pay for any loss (whether it is direct or indirect) due to:

  • Any earth movement (natural or man-made), means earthquakes, volcanic eruption, mine subsidence, land slide, mud slide, mud flow, earth sinking, rising or shifting.
  • Water damage such as flood, surface water, waves, tides, tidal waves, overflow of a body of water or pressure due water below the surface of the ground.

However, direct losses by fire, explosion, sonic booms, theft or breakage of glass resulting because of any type of earth movement (except volcanic eruption) are covered by policy. So we need to know more about the geological factors before buying any property or house. If we know any geological risk about the house or property, we should not go for it or we should find specific insurance plan for that.

1 comment:

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