When Tropical Storm Ondoy caused huge floods across Metro Manila in 2010, many homes were submerged underwater, resulting in untold damage. Amid the destruction, some of the affected owners found comfort in the knowledge that they had taken out insurance on their property–only to find out a few weeks later that their insurance did not cover such an incident.
And why not? Because their insurance policies did not include damage resulting from floods.
Until this happened, majority of consumers were not aware that flood insurance was not included in their policies. Most home insurance policies contain an exclusion case for damage caused by “acts of God.” This term pertains to any act of nature that may not be controlled, including earthquakes, war, mobs, and many others.
To ensure that you do not encounter any problems when claiming insurance, here are some tips to guide you:
- Educate yourself about your current insurance coverage.
Read your homeowner’s insurance policy carefully, and be aware of what exactly it covers. It is important to know if your policy contains an exclusion. If you find out that your policy excludes damage resulting from storms and floods, ask how you can have additional coverage for this risk. Think of possible scenarios and ask all sorts of questions: If your roof leaks as a result of a storm, and water seeps in, damaging your appliances, will this be covered by your policy? It is essential to know these things before they happen, rather than argue about them after the fact.
- Carefully assess your needs.
The need for specific coverage varies per individual—those living on the 30th floor of a high-rise would most likely not be concerned about flood insurance, but those in subdivisions near creeks or known flood-prone areas might find this extremely useful. Based on your assessment, ask your insurance agent about what products they may have that specifically address your need.
- Shop for riders that you think will be useful or will give you greater peace of mind.
Some that may be of interest include:
- Personal property: This covers expensive items such as jewelry, art, and the like inside your house.
- Flood insurance: This will cover damage resulting from floods.
- Replacement cost (contents): This rider ensures that there will be no depreciation for the personal property you must replace due to theft or damage.
- Guaranteed replacement cost : With this rider, the insurance company will replace your home or car with another of the same value, even if the cost is higher than that listed in your policy.
- Adjust the amount of your coverage to reflect your current needs.
Look at the amount of coverage you have to ensure that there are no so-called protection gaps. It is possible that you have automatically renewed your policy without adjusting the amount of coverage in the past ten years. If you took out a home insurance for P1 million ten years ago, and you find yourself claiming for damages, you might be surprised to see how little your existing policy can cover. Consider engaging the services of an appraiser to know how much coverage you should get.
- Keep your policy updated.
The only thing worse than not having enough coverage is to find out you cannot file for insurance because your policy has lapsed. This is a really a rudimentary thing, but it is quite surprising how people frequently forget about keeping their insurance policies active, only discovering too late that it has lapsed. Use reminder functions on your calendar or use apps to remind you of upcoming deadlines.
Be proactive in ensuring that you have adequate protection by looking into the details which can spell all the difference for you when you need it most.
