Should I buy Earthquake Insurance ?
When we were kids, we have experienced very few earthquakes. But ask any 5-year-old kid today and he is most likely to have experienced a few already. This is because the frequency of earthquakes in India has increased significantly over the past decade. With increasing human activity such as mining and building of dams and an increase in the number of high-rise apartments, there are several factors that have contributed to the rising number of earthquakes.
The situation is not going to change anytime soon giving rise to the question that should I buy earthquake insurance
What is an Earthquake Insurance?
Just like a house insurance pays for the rebuilding of house after a calamity, such as fire, flood, riots, theft, burglary, an earthquake insurance provides coverage for dealing with the destruction caused due to earthquakes. It is important to note than an earthquake insurance is an insurance that you purchase in addition to your home insurance policy.
Depending upon the area you live in and the probability of the area getting an earthquake, the cost and coverage of the policy may vary.
What does an Earthquake Insurance Cover?
For homeowners, earthquake insurance typically covers:
Your home building – It provides the same amount of coverage for your house as a home insurance policy.
Your belongings – The content of your house including your electronics and furniture.
Cost of living – The cost of living elsewhere while your home is being repaired after an earthquake.
If you are a tenant, you can still buy an earthquake insurance policy that will cover your personal belongings and cost of living/moving.
It is important to note that an earthquake insurance may or may not cover damages caused due to fire or flooding followed by an earthquake. Please check your insurance documents to be sure about all such technicalities.
Why is an Earthquake Insurance Important?
Depending upon the severity of the earthquake, the damages caused can be significant. In worst cases, you might lose both the house and all its belongings. Getting a house rebuilt is no small feat and you will need financial assistance which an earthquake insurance policy can offer.
Reconstruction cost can vary from INR 1,800 to 3500 per square foot depending upon the design of the house. In order to build a 2,000 square foot house, you need to shell out INR 35-70 lakh, for which an earthquake insurance premium can begin for as low as INR 2100/year.