Cyclone storms and flash floods have become very common in recent years. The damage due to Cyclone Fani has run into few thousand crores. While those who have insured their home and vehicles were saved, others faced irreparable loss.

Rather than doing a guesstimate on whether the IMD will get its prediction right on normal rains this year, sign up for insurance and secure your properties.

Car insurance

A motor insurance policy has basically two parts — an own damage (OD) cover and a third-party liability cover. While the latteris compulsory, the former is optional. Damages due to a natural catastrophe, such as a cyclone, fall under the OD cover.

From September 1, 2018, it has become mandatory for all new vehicles to have a long-term insurance cover. The owner must shell out upfront the entire premium for the third-party cover for three years at one go. The OD cover can be renewed every year.

During the Orissa floods this year, many car insurers rejected claims for repair or replacement of the engine as in most cases, it was a ‘consequential loss’. This means that the owner tried to move the vehicle through a water-logged area. Consequential losses are not covered under the regular motor insurance policies, as they are not the outcome of a catastrophic event, but the result of a certain action of the policyholder. However, in case of events such as cyclones, there is no such distinction.

Say your car was was damaged because of a tree collapsing on it due tohigh winds, then it will still be covered under motor insurance.

But note that accessories such as the music player, parking camera and air-conditioner are not covered under the regular motor insurance policy unless you specifically ask for it and pay an additional premium.

Car interiors and upholstery are covered, but they attract high depreciation. For all rubber, plastic and nylon parts, tyres and tubes, batteries and air bags, the insurance cover assumes 50 per cent depreciation. For fibre glass components, 30 per cent depreciation is charged. For wooden, metal and other parts, depending on the age of the vehicle, depreciation may vary from 5-50 per cent.

To avoid any disappointments at the time of need, you can opt for add-on covers that come with the motor insurance policies.

You can also consider a ‘zero depreciation’ or ‘bumper-to-bumper’ cover. This is slightly expensive but pays full price for claim on spare parts. The ‘invoice cover’ is another add-on. Here, the policyholder will be paid the cost of buying a new car of a similar make and model. The additional premium for zero depreciation and invoice cover will be about 10-20 per cent.

Home insurance

During catastrophic events, both the exterior of the building and the contents inside can get damaged.

To cover your home, you can either choose a basic fire policy or a comprehensive home insurance cover. While a fire policy may cover the house only against fire and allied perils, a comprehensive home insurance will also cover other risks, such as loss due to burglary, earthquake, fire, landslide, and flood. In case of fire policies, also note that any consequential loss will not be covered.

In a comprehensive home insurance policy again, you will have many options. If you want to cover the structure of your house, go for the ‘re-instatement cover’ rather than an ‘indemnity cover’. The former will compensate you for the cost of reconstructing the home; and the latter calculates compensation on the re-construction cost less depreciation.

In addition, make sure you buy a policy that pays up for replacing the damaged contents. If you want a cover for electrical/mechanical break-down, you should ask for it specifically; otherwise, it is generally excluded. Also, remember that DG sets and solar panels, which are usually installed outside the house, may not be covered under home insurance and one needs to specifically include these under the policy.

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