Is Your Home Covered? How Climate Change Impacts Property Insurance

Uzone.id – There are many ways to protect our homes from bad things, from padlocking the fence, installing alarms and CCTV, to using the services of local security officers. 

However, if a disaster has already occurred, how do you restore the value of lost or damaged items? Find the information through the review below. 

Climate change causes an increase in the frequency and intensity of various natural disasters, such as floods, storms, droughts, and forest fires. 

These disasters can cause significant property damage, with major financial losses for home and business owners.

“Climate change has increased the risk of floods, storms, and droughts in Europe,” said Disaster Risk Expert from the University of Potsdam, Germany, Dr. Peter Höppe.

“Property insurance plays a crucial role in helping people and businesses recover from the damage caused by these natural disasters,” he added.

Moreover, the cost of repairing property damaged by natural disasters continues to increase day by day. This is caused by various factors, such as inflation, rising costs of building materials, and high demand for repair services after natural disasters. 

Property insurance can help cover the costs of these repairs and help you recover more quickly after a natural disaster.

Having property insurance can give you peace of mind, knowing that you have financial protection if your property is damaged by a natural disaster. This can help you reduce stress and anxiety during difficult times.

“The insurance industry is committed to helping people and businesses cope with the impacts of climate change. Property insurance is one of the key tools we offer to help them protect themselves from financial loss,” said Annamaria Scorza, Executive Director of the European Insurance Association.

Property insurance is a form of protection for the house and its contents if a risk or disaster occurs. In general, there are two types of property insurance:

1. Home Insurance

A house not only functions as a residence but is also an investment asset that has value. Therefore, the house must be protected from all risks and disasters.

Well, property insurance is the answer to protect your home from bad things that might happen.

Home insurance means that losses and risks are transferred to the insurance service provider.

So, the one who bears all risks and compensates for losses is the insurance provider.

These losses include when a house experiences a fire or is affected by a natural disaster.

Now, home insurance not only provides physical protection for the house but also the risk when an accident occurs in it, such as protection for family members.

2. Business Insurance

From its definition, property insurance is a form of protection for an asset. So, in this insurance what is protected is business property.

Property insurance has a form of protection for businesses as well, namely protecting the property of business activities (business interruption).

This business insurance has benefits, such as when the property where your business is located experiences a fire, the insurance company will replace your business income temporarily.

Business actors can apply for business insurance for property when a risk or disaster occurs.

Before providing a coverage price for business interruption or loss of business property, the insurer considers aspects such as financial trends and the recovery period from the loss experienced.

Here are four reasons why property insurance is important:

1. Provides financial loss protection against the risk of property damage and the goods therein Property insurance can provide financial protection for the insured building listed in the insurance policy in the event of damage or destruction, which is caused by risks which are also listed in the property insurance policy.
2. The value of the house is maintained. Apart from being a place to live, a house is also an asset as a high-value investment. If the house is damaged, of course, the value of the asset will decrease. So, by having insurance, the value of your house will be maintained because you can immediately renovate damaged buildings with the insurance money guaranteed by the insurance.
3. The premium value is relatively affordable. Property insurance premiums are considered affordable, but unfortunately, many people don’t know about it. If you compare the value of the house and its contents to the premium that must be paid, then the costs are very small compared to the financial losses that must be borne by yourself if an undesirable event occurs. The benefits of property insurance are much higher than the premium costs paid.
4. Relieves sudden withdrawals and provides a sense of security. House damage often occurs suddenly and requires a lot of money for the renovation process. This can disrupt your financial stability, especially if you don’t have emergency savings, and you feel anxious about the risks that could occur at any time. Property insurance can make us feel safer and calmer because the house is protected and has guarantees from the insurance company.

The main guarantee that you will get from having property insurance is coverage for building damage due to fire, lightning, explosions, falling airplanes, and smoke abbreviated as FLEXAS (Fire, Lighting Explosion, The Impact Of Falling Aircraft, And Smoke). 

Apart from the main guarantee, you can also get extended guarantees by adding premium costs. The expansion guarantee may include:

• Floods, storms, hurricanes, and water damage.
• Damage due to demolition and other coverage other than those excluded in the policy.
• Riots, strikes, mischief, and mayhem.
• Terrorism and sabotage.
• Earthquakes, volcanic eruptions, and tsunamis.

In terms of protecting your house from FLEXAS, you can also use fire insurance. What is the difference between fire insurance and property insurance? 

If Fire Insurance only covers losses due to the risk of fire, lightning strikes, explosions, falling aircraft, and smoke, then Property Risk (PAR) Insurance covers all damage and losses caused by various kinds of risks, not limited to fire. 

Property All Risk Insurance also has additional protection in the form of expanded coverage for risks against disasters such as typhoons, storms, floods, and water damage.

Choosing the Right Property Insurance:

It is important to choose the right property insurance to meet your needs. Be sure to consider the coverage, premiums, and deductibles offered by various insurance companies. 

You should also consider the specific risks your property faces, such as its location and its resistance to natural disasters.

1. Choose insurance products according to your needs. Before buying an insurance product, first check the location and condition of the property that we will insure, starting from the construction materials, type and system of plumbing, as well as electrical installations.

Also, find out the potential risk of natural disasters or flooding that may occur at the location of the house. Choose property insurance that suits your needs with an affordable premium value.

2. Understand insurance policies. Each insurance company has different provisions regarding the risks that can be guaranteed. 

For this reason, before buying, read and understand the insurance policy first, find out the coverage and guaranteed value of the insurance product, and don’t forget to pay attention to the exceptions in the insurance policy.

3. Understand how to submit a claim. One of the problems that often occurs in insurance is failure to make a claim. For this reason, you need to understand the methods and conditions for submitting claims for property insurance products. 

Understanding the risks associated with climate change and having adequate property insurance can help you protect yourself from financial loss and ensure peace of mind.