Insurance cover against Tsunami & Earthquake

Tsunamis are massive sea waves triggered primarily by earthquakes that occur under the sea. A considerable amount of water may be displaced when an earthquake or volcanic activity occurs. Waves are formed when water is disturbed. When these waves approach shallow water in coastal locations, they become high and crash into the shoreline. Tsunamis wreak extensive devastation to people and property.                                                                                                                                             


Following the tsunamis that struck Japan and India in 2004, a debate arose as to whether insurance coverage for tsunami is available in India. Tsunamis have been reported in India as long back as 1762 AD. The Indian peninsular is covered by the water bodies on three sides; therefore, those staying in the coastal area in earthquake-vulnerable areas require a tsunami insurance coverage. Coverage for tsunami insurance is not required if you are living in the inlands, comfortably far away from the sea.

Sadly, insurance companies are yet to provide a tsunami policy and the world over, the only option for tsunami insurance is through coverage provided for natural calamities like flood, landslide, earthquake, volcanic movement, etc.

The term ‘tsunami’ and ‘tidal wave’ is the same thing. The world ‘tsunami’, a Japanese word was created by the scientific community to distinguish tsunami damage from other forms of flood and earthquake damage. Earthquakes, submarine landslides and volcanic eruptions are some of the sources of these killer waves.

Why no Tsunami insurance Cover?

A characteristic that distinguishes tsunami from most other major hazards is that it does not occur from one cause. As some experts say, to define tsunami as a result of earthquake only is a narrow definition. While ‘earthquake’ is a narrow term to define the cause of tsunami, ‘earth movement’ is a broad term that includes earthquakes, landslides, rockslides, mudslides, subsidence, etc. Therefore, it is better to take insurance for both flood and earthquakes.

 Tsunami Prone Areas in India

The government has identified a list of areas prone to tsunami in India on eastern coast. These include –

1) Puri
2) Kakinada
3) Machilipatnam
4) Nizampatnam-Vetapalem
5) Chennai
6) Cuddalore-Pondicherry
7) Rameshwaram
8) Thoothukudi
9) Alappuzha-Chavara
10) Kochi

You should know that tsunamis aren’t common in India due to their geography. However, India isn’t immune to tsunamis. Past records show the tsunami-affected areas in India that suffered a major blow. These tsunamis originated in the Indian Ocean.    


How to Prepare for a Tsunami

1) Before a Tsunami

  • One should get ready before a tsunami strikes. It will help reduce damage to your home and business, it will also help you to survive.
  • Ask your council about your tsunami risk. If you live in a coastal area, always keep a check on the local warning arrangements.
  • If you have a disability or special requirements, arrange with your support network to alert you of any warnings and emergency broadcasts.
  • Always advance a Household Emergency Plan and have a Getaway Kit ready with you.
  • Know where the nearest high ground is and how you will reach it. Plan to get as high up or as far inland as you can. Plan your escape route for when you are at home, as well as for when you may be working or holidaying near the coast.

2) During a tsunami

  • If possible, keep your getaway kit with you if possible. Do not travel into the areas at risk to get your kit or belongings.
  • Try to take pets with you if you can do so safely.
  • One should move instantly to the nearest higher ground, or as far inland as you can. If you have evacuation maps handy, follow the routes shown.
  • Walk or bike if possible and drive only if essential. If driving, keep going once you are well outside the evacuation zone to allow room for others behind you.
  • If in any case, one cannot escape the tsunami, then he/she should go to an upper storey of a sturdy building or climb onto a roof or up a tree. Or grab a floating object and hang on until help arrives.
  • One should remember that boats are usually safer in water deeper than 100 metres than if they are on the shore. Always move boats out to sea only if there is time. It should be safe to do so.
  • Never go to the shore to watch for a tsunami. Always try to stay away from at-risk areas until the official all-clear is given.
  • Listen to your local radio stations as emergency management officials will be broadcasting the most appropriate advice for your community and situation.

3) After a tsunami

  • Always try to be connected to the radio for civil defence advice and do not return to the evacuation zones until authorities have given the all-clear.
  • Be aware that there may be more than one wave and it may not be safe for up to 24 hours, or longer. The waves that follow the first one may also be bigger.
  • Check yourself for injuries and get first aid if needed. Help others if you can.
  • Do not visit for any sightseeing.
  • One should extreme caution while re-entering homes or buildings, floodwaters may have damaged buildings. 
  • Be sure to take notes and photographs for insurance purposes if the building gets into damage state. If you rent your property, contact your landlord and your contents insurance company as soon as possible.

A tsunami is actually a series of waves. One must not go to an affected coastal area until it is declared to be safe by authorities.


Types of possible insurance coverage

In India insurance for perils due to tsunami can be ensured through some coverage provided in Home, Auto, and Fire and special peril insurance policies.                                                                                           Earthquake Insurance in India Insurance as a whole has a very low penetration in India. Total insurance premium In India hovers around 0.5 % of the global premium and around 1.5 % of GDP of India. Majority of the population remains uninsured. Penetration of insurance can also be adjudged by the fact that insured losses are a small fraction of total economic losses in the event of catastrophe. The Bhuj Earthquake of Gujarat is one of the greatest earthquake disasters that India has faced in the last 200 years. An official figure published by the government states a death of 17,122 persons, a figure that has since been reduced to 14,000. However, the number of fatalities is likely to have been much higher. The economic loss is US$ 4.5bn, with insured losses in the range of US$ 100m (Annual Review: Natural Catastrophes 2001, Munich Re). Earthquake risk is inbuilt in many of the Life and Non-Life policies. Life policies cover death due to various causes and the risk of earthquake is not excluded. Non-life policies provide for cover against accidental death or injury under various kinds of personal accident policies and hospitalization benefit for treatment of accidental injury under Mediclaim. As far as property insurance is concerned, Householders Insurance provides insurance coverage to the Building and its Contents. The granted covers include Fire and allied perils including earthquake. The own damage section for two wheelers and four wheelers under motor package policy provides cover against earthquake risk. Other classes of insurance such as Marine, Engineering, Rural and other miscellaneous insurance also cover earthquake risk in some form or the other.

What does the policy against calamities cover?

The policy (Cost: Rs 0.6 per Rs 1,000) insures your house against fire, natural calamities like floods, storms, cyclones and earthquakes, riots, terrorist attacks, gas cylinder explosions, etc. What are covered are loss of the building and its contents. What are not covered are loss or damage to documents, bonds, securities, precious stones, jewellery, cash, and valuables.

Who among earthquake victims can claim insurance benefits? For what?

All those individuals who are policyholders (or their nominees) can claim insurance cover. The earthquake falls within the purview of personal accident insurance policy and fire insurance cover taken by organizations, companies, business establishments and institutions. Individuals may submit that earthquake is a personal accident and claim benefits. It is legal. Only a token premium needs to be paid. Claims can be made for damages to households and business establishments, loss of belongings, death, and injuries.

What should be done to fine-tune insurance sector for India-specific situations?

Experts suggest that insurance against fires, earthquakes and other such calamities must be made mandatory for housing establishments, just as in the case of motor insurance, where insurance against risk due to a third party is compulsory. It is being pointed out that developed countries have exclusive property insurance policies tailor-made for specific localities. So an earthquake-prone state like Gujarat ought to have a law that makes property insurance mandatory. This, experts feel, has multiple benefits: survivors of calamities would not have to depend on charity; liability-averse insurance companies would offer housing cover only for good structures; this, in turn, would pressure builders to construct top-quality houses/complexes; priceless data on disaster-prone areas/zones would be created.

TAC* Rates for earthquake

  *Tariff Advisory Committee on insurance
BIS ZoneRisk ZoneRates Remarks
Zone I 1.00% High Damage Risk Zone
Zone II0.50% Moderate Damage Risk Zone
Zone III0.20% LowDamage Risk Zone
Zone IV0.10% Very LowDamage Risk Zone
Zone-I comprises of entire north-eastern India, parts of Jammu and Kashmir, Himachal Pradesh, Uttaranchal, Rann of Kutch in Gujarat, parts of North Bihar and Andaman & Nicobar Islands. Zone-II covers remaining parts of Jammu & Kashmir and Himachal Pradesh, Union Territory of Delhi, Sikkim, northern parts of Uttar Pradesh, Bihar and West Bengal, parts of Gujarat and small portions of Maharashtra near the west coast and Rajasthan. Zone-III comprises of Kerala, Goa, Lakshadweep islands, and remaining parts of Uttar Pradesh, Gujarat and West Bengal, parts of Punjab, Rajasthan, Madhya Pradesh, Bihar, Jharkhand, Chhattisgarh, Maharashtra, Orissa, Andhra Pradesh, Tamil Nadu and Karnataka. Zone-IV covers remaining parts of the country.
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