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Property & Casualty Insurance/General Insurance coverage in event of a Earthquake.


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QUESTION: Dear Kristen‎

Can Apartment / Bungalow property owners claim their Insurance on occurrence of earthquake ?.

Do General Insurance policies provided by Public or Private limited cos cover insurance coverage for natural disaster such as Earthquake ?.

Awaiting your reply,

Thanks & Regards,
Prashant S Akerkar

ANSWER: Prashant;

I can't give you a specific answer about insurance coverage in India. However, I'll try to give you some information. Earthquakes are generally considered "an Act of God" and therefore, are not covered under a standard homeowners insurance policy. But, if you have a home in an earthquake prone area, you can purchase an Earthquake policy to specifically cover it. These policies usually have high deductibles but can be very important if the entire home is destroyed. If there is merely damage to the home, the policy might not be worth the premium.
Now it can be a little more complicated depending on the actual "cause of loss" so I'm going to give you an example. Let's say there is an earthquake and it causes a tree next to your property to fall and go straight through your roof, the tree falling is actually the cause of your loss, not the earthquake itself, and could be covered. If you have a high value property in an area prone to earthquakes, I would recommend speaking to an independent agent about an Earthquake policy.

I hope this has answered your question and if you need more information, feel free to email me again.


---------- FOLLOW-UP ----------

QUESTION: Dear Kristen

Thank you.

The "Property Protection from Earthquake" Non Life Insurance becomes an interesting product.

Example :

A Property (Flat in a building, Apartment, Bunglow) is worth INR 80 lacs (current market value) and contents within the property is INR 10 lacs. Policy commencement Date : June, 2013.

A "Property Protection from Earthquake" Non Life Insurance Policy is purchased from the company/corporation (insurer) which will cover the property structure and contents protection in event of a earthquake.

The insured is paying Rs 5 lacs premium yearly. Now Earthquake happens in June 2018 i.e. after five years. The property market value in June 2018 is INR 1 crore, 30 lacs.

The insurer while processing the claim for his property and contents in June 2018 will receive

INR 1 crore, 40 lacs (1 Crore, 30 lacs + 10 lacs)


INR 90 lacs (80 + 10) ? from the insuring company.

Note : INR = Indian Rupees currency.

Awaiting your reply,

Thanks & Regards,
Prashant S Akerkar

Good day Prashant;

Again, I'm not familiar with insurance coverage in India. However, I would assume the principals and concepts are similar to our coverage here in the US. Here in the US, the market value of the property has really no bearing on what an insurance company would pay in the event of an earthquake (or any other loss). What an insurance company would pay is the amount necessary to Reconstruct the property. So you could have flat/bungalow in a very desirable area and it's market value is say $1,000,000 but the actual cost for construction, etc... is $400,000, the insurance company is going to pay the $400,000. Now again, it can be a little more complicated than that because here in the US you could have a policy that provides for "replacement cost" which is the scenario I gave above, or "Actual Cash Value" but again, that's the cost of construction, not market value, or you could have "Agreed Amount" where you and the insurance company agree on a specific amount. So you and the insurance company could agree on say $500,000 but if it takes $700,000 to rebuild, you'll have to cover the extra $200,000 yourself. So the bottom line is that the market value is not how an insurance company determines the amount they will pay. As for personal property or contents, here in the US, if you have the "Replacement Cost" option, the insurance company pays to replace the items with "like kind" so if you have a flat screen tv and it's destroyed but Samsung no longer makes that model, the insurance company will pay an amount allowing you to purchase a new flat screen, the same size you had before. One of the best pieces of advice I can give you with regard to contents is to make a video of all of your belongings, especially anything high in value, and keep the video on a cloud or similar. That way if something does happen, you can easily show the insurance company exactly what was in the flat.
I hope this has helped but the best thing you can do is read the actual policy itself. With that said, I seriously doubt there is any scenario where you would be paid anything other than the amount to rebuild/replace, not the market value of the property. Insurance is designed to make a person "whole" again, not to have the person profit from a loss.
Let me know if I can help any further!


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Kristen Mulcahy, CIC


My specialty is commercial insurance for business owners. I can answer questions regarding liability, property, auto, workers compensation, directors and officers, umbrellas and risk management for all types of businesses. Risk management, or loss control, is taking measures to reduce the chances of a loss in the first place or, helping to prevent a loss from happening again. Insurance can be complicated and confusing and there are no stupid questions! I am President of Western States Loss Control, Inc. and we provide insurance consultations to business owners and surveys/inspections for insurance companies in all states West of the Mississippi.


20+ years of industry experience.

Past President of SCIP Southern Connecticut Insurance Professionals, a chapter of International Association of Insurance Professionals.

Certified Insurance Counselor, 2001.

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