Rush for cover: For claiming insurance on flood-damaged home, act on time

Do not start a flooded car as it could cause further damage that may not be covered by your motor policy

Parts of North India were flooded this month, prompting the Insurance Regulatory and Development Authority of India (IRDAI) to urge insurers to speed up claims. It has asked them to activate and publicise 24-hour help lines. Insurers were also asked to set up special desks at the district level with dedicated teams to process claims quickly. If your house or vehicle was affected by the floods and have insurance cover, now is the time to apply for claim settlement. Any delay can do to reduce your chances of getting a claim.

Home insurance

If you have an insurance cover for your home and its contents, you will receive compensation for any damage suffered due to inundation. “Storm, Tempest, Flooding and Inundation (STFI) risk is a standard component of most home insurance policies. Since this is an Act of God, claims for flooding generally get covered,” says Kapil Mehta, co-founder, Secure Now.

The only situation in which the insured doesn’t get compensation is if flooding was the result of gross negligence on the insured’s part, he says.

The insured should inform the insurer about the damage immediately via email or phone calls to the toll-free number. “Don’t delay in informing the insurer. The longer you wait, the more difficult it becomes to get the claim,” says Mehta.

The insured should also take reasonable steps to prevent further loss or damage to the house and its contents.

The insured needs to submit a claim form in which he should provide the details of her policy. This should be accompanied by photographs or videos of the flooding to justify the damage. She should also submit an estimate of the cost of repair from a contractor.

The insurer, on its part, will follow a few standard procedures. “An investigator will survey the home and its contents and take photographs. The insured must answer the surveyor’s questions truthfully regarding the damage to his home and contents,” says Shashi Kant Dahuja, chief underwriting officer, Shriram General Insurance.

The insured must understand the deductibles and exclusions that apply in her policy. “Claim up to the deductible amount is not payable. Exclusions mentioned in the policy document will also not be covered,” says Dahuja.

Avoid mistakes 

The insured should not sell, remove or replace any of the damaged items for which she is making a claim without the insurer’s approval. She should also not carry out any repairs without the surveyor’s approval, unless it is urgent.

“Any damage that was pre-existing in nature will not be covered. If the surveyor assesses that the damage was due to the insured’s negligence, or due to lack of proper maintenance, in that case also the damage will not be covered. Any deliberate or wilful loss is also not covered,” says Dahuja.

The basement, which is the part of the house most vulnerable to flooding, should have been reported at the time of purchasing the policy. "If you did not report it, your claim could be rejected,” says Mehta.

The insured should avoid exaggerating the cost of repair and instead provide a reasonable assessment of the cost.

Always keep a soft copy of the insurance contract in your email, Google Drive, or Dropbox. (in case the physical copy is lost).

If the insured raises questions about the claim, don’t react angrily. “Answer all the questions rationally instead of arguing or fighting,” says Mehta.

Motor insurance

Will the claim be covered? If policyholder only has the mandatory third-party cover, then damage caused by flooding will not be covered. “Damage due to flooding will only be covered if the policyholder has also purchased the Own Damage component of motor insurance,” says Sandeep Saraf, head-motor insurance renewal, claims and customer experience, Policybazaar.com.

If the flood water enters the cabin or the engine, then flushing and cleaning of the engine and other affected parts will be covered under the Own Damage policy. The policy will also cover the cost of retrieving a fully submerged vehicle and repair or replacement of its damaged parts.

However, the insured can’t make a claim for any consequential loss that occurred during the floods, damaging the engine and other parts. All efforts should be made to remove the water from the car at the earliest to prevent further damage to the wiring and mechanical components. The car should be kept in the sun and ventilated properly after removing water from it.

“Negligence can lead to water seeping into different parts of the car. Such damages are considered consequential damages, which may not be covered by the policy,” says Kunal Jha, head-motor product, Digit Insurance.

The insured should contact the OEM’s (original equipment manufacturer, basically the car manufacturer) service centre and also notify the insurer about the extent of damage. The OEM will provide the support required to evacuate the vehicle from the spot.

Next, the insured must assess the damage to the vehicle. The insurer will ask for evidence to support the claim. As in the case of home insurance, here also the insured should take photographs and film videos of the interiors and exteriors of the car to support his case.

A surveyor and workshop experts appointed by the insurer will then determine the extent of damage.

Mistakes to avoid: The car should not be driven in flood water. Any damage due to such driving is considered consequential loss, which is not covered by the policy.

Another mistake that the insured should not commit is attempting to start the vehicle once the engine has got flooded with water. “Any attempt to start the vehicle can damage the engine and other electronic equipment. Such damage is not covered by the standard motor insurance policy,” says Jha.

Trying to start the car can lead to high hydro locking of the engine and the transmission. “The cost of repairing a hydro-locked car can be extremely high,” says Jha. 

Validate claim with proper documentation

Home insurance

• Duly filled insurance claim form
• Layout plan of the building or affected area(if required by the insurer)
• Loss estimates and engineer’s quotation for repair or construction
• Photographs and videos of the flooded area

Motor insurance

• Duly filled insurance claim form
• Vehicle's registration certificate
• Copy of driver’s licence
• Photographs or videos of the submerged vehicle