Natural Calamities: 6 Ways To Be Financially Disaster-Proof

If you have faced natural calamities like earthquake, flood, or landslides yourself, you know the damages it cause to your life and properties. Hence, it’s important to be aware of ways to prepare yourself financially to prevent a disaster in future.
Disaster, Earthquake, landslides, finances
Disaster, Earthquake, landslides, finances

We are at the fag end of the year 2023. And if we look back, along with several good things that happened to us, India has also been ravaged by a series of natural calamities, including flash floods in the Himalayas, heavy rainfall leading to landslides in the Himalayan region, and the occurrence of cyclone Biporjay. 

While this year’s disasters claimed hundreds of lives, a number of homes, cars, businesses, and other personal properties were also destroyed. 

Facing the aftermath of severe climate events can be overwhelming for you or your family, impacting both finances and emotions. The good news is there are practical steps you can follow to recover and become more resilient to disasters in the future.

Here are certain steps to follow to recover from any natural calamity: 

Keeping Your Home And Family Safe: The first and most important thing to do when getting ready for disasters is to make sure there are plans to protect your family and home right from the start. For instance, if you live in an area where earthquakes happen, get a house with strong foundations and quake-resistant features. If cyclones are common in your area, it's a good idea to build strong houses away from the shoreline. To avoid flooding, don't build homes in low-lying areas.

Go For Digital Document Storage: Your important documents like Aadhaar, PAN, passport, or driver's license are crucial. Even things like medical, academic, or work records are really important. But if a disaster happens, there's a chance you could lose them, making it harder to rebuild your life. So, why take that risk?

To be ready for such situations, you can easily keep digital copies of your important documents online in a secure storage account, like DigiLocker, the national digital locker system of the government of India.

To store your documents digitally, you just need to:

  • Go to the website.

  • Sign up using your mobile.

  • Sync your Aadhaar details.

  • Get your documents from issuers.

  • Share documents when needed.

  • Documents get verified.

Motor Insurance: If a disaster damages your car, there are two types: inside or outside damage and engine trouble. Your insurance can help with the first kind, but fixing the engine can cost a lot. If your car gets wet in a flood, don't start it. Water in the engine might not be covered by your insurance. They cover disasters like floods, but not everything that happens afterward. Tell your insurance about expensive extras like a GPS or fancy stereo when you get coverage. It might cost more, but it makes it easier to get money if your stuff gets wrecked. “A comprehensive motor insurance policy covers damages caused by floods. However, buying an “engine protection” add on is important to ensure any loss caused to the engine and its parts is covered,” says Adarsh Agarwal, appointed actuary, Digit General Insurance. 

Property Insurance: Even though we can't control natural disasters, getting property insurance can help protect against damages from things like floods, earthquakes, and burglaries. Paying a fixed amount each year for property insurance, especially if you live in disaster-prone areas, can give you financial support if something bad happens. Property insurance is like a big plan that covers different things under one policy. It doesn't just protect against property damage but can also cover your stuff and sometimes personal liabilities. It usually covers things like fire, lightning, floods, and cyclones, but each policy can be a bit different. War and nuclear risks aren't covered.

Some insurance companies offer extra things you can add to your policy to get more coverage based on your needs. People often realize the importance of home insurance after they go through unexpected losses, so having a good property insurance cover is a smart idea. Whether you own a home or rent, you can get property insurance. The cost is usually based on how much your property is worth, and it's not too expensive, usually just a few thousand rupees each year.

There are two main types: basic fire insurance covers things like fire, lightning, storms, and floods. Some also offer earthquake coverage, but you might need to add it on based on where you live. The comprehensive one, called a householder’s package policy (HPP), goes beyond the basics. It protects your home and stuff from things like theft and electrical problems. You can also add on extra things like personal accident coverage, which gives you money if you can't work because of an accident.

Both the basic and HPP plans can help you fix your home after a cyclone or flooding. It's a good idea to insure not just the structure but also the contents of your home, like furniture. Insurance won't cover normal wear and tear or damage that was already there. If a disaster happens, take pictures and videos of the damage to help with your insurance claim.

Life Insurance: Life insurance is another important part of getting ready for disasters. If you're the one making money for your family, having life insurance is a smart move. We can't predict what might happen in a disaster, and you wouldn't want your family to struggle if something happened to you. A good life insurance policy can help your family recover if a tragedy happens.

Keep Some Emergency Cash At Home: People who survived hurricanes in Florida, USA, have a valuable lesson: always have cash at home in case of natural disasters. During these situations, power outages can happen, and that means ATMs and other electronic ways to get money might not work for a while. Having cash can help you cover important needs until the power is back, and you can use ATMs again.

Getting through problems caused by disasters takes time, determination, and knowledge. Follow the six steps mentioned earlier to reduce the impact of a severe weather event, keep yourself together, and recover after a natural disaster.

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