Acts of God and other insurance riders you need to know INQUIRER.net
November 05, 2009
(This is part of Take Charge of Your Money, a partnership between INQUIRER.net and Citibank to help readers handle their personal finances well.)
Q: My friend's car was submerged in flood due to the recent typhoon Ondoy. She filed a claim with her insurance company but found out that her policy did not include coverage for “acts of God.” I think it's unfair for insurance companies not to cover damages brought about by the flood. People have already suffered much and they need all the help possible. What can be done about this? – Donna
A: Many car owners have been affected by floods due to typhoons Ondoy and Pepeng. Vehicles have been submerged in flood water and mud, and some were even carried away by the current of rushing water.
Days and weeks after the flood, car owners flocked to service centers to have their vehicles repaired. As with your friend, many people who had comprehensive motor insurance also contacted their insurance companies to file for a claim.
But as your friend realized, unless the insurance policy has an “acts of God” rider, the insurance company is not liable to pay for damages caused by natural disasters such as flood. It will not pay for damages since it is not part of the insurance contract entered into between the insured and the insurer (insurance company).
What does “acts of God” mean? “Acts of God” are natural disasters that cannot be brought about by man. Examples are flood, typhoon, earthquake, volcanic eruption, tornado, and landslide, among others. When a person wants to be covered for damages that may arise from acts of God, he has to request the insurer to add this rider to the policy and pay for the corresponding added premium. This is because the standard comprehensive insurance does not include a rider for acts of God. (A rider is an additional condition made part of the standard insurance policy.)
Although the insurance company no doubt would like to help people in the same boat as your friend, it cannot do so because the contract does not allow coverage for acts of God. There is nothing that can be done. Upon renewal, though, your friend may request for the acts of God rider.
There are other insurance riders worth looking into:
1. Strike, Riot and Civil Commotion -- Some insurance policies will include coverage for damage to property caused by these events.
2. Roadside assistance and towing coverage – If you have this rider, you may just call your insurer if your car breaks down, and it will arrange for a tow truck to come and bring your car to an accredited service center.
3. Accidental Death Benefit – Should the insured die as a result of an accident while in the insured's car, an amount will be given to the beneficiary or heirs. This benefit may be extended to the insured's authorized driver. Some comprehensive auto insurance policies add this benefit at no extra cost to the insured.
Car owners need to read the fine print closely when availing of comprehensive auto insurance. Usually there is a deductible clause which provides that damages up to a certain amount (example, P4,000) will be paid for by the insured. Another provision would be the depreciation clause where the amount of settlement shall be the cost of brand new part less the share of the insured on the cost of replacement computed based on a depreciation schedule. This means that if total damages amount to P20,000, the first P4,000 will be paid by the insured, and only P16,000 will be paid by the insurance company. There may also be a repair clause where if the vehicle is more than 2 years old at the time of the claim, repairs will no longer be undertaken by a dealer (CASA) repair shop.
The recent typhoons have underscored the importance of getting comprehensive motor insurance with an acts of God rider. Prior to this, motorists just usually avail of the mandatory third party liability (TPL) insurance, thinking that the high cost of premium for comprehensive motor insurance is not worth it. However, when disaster strikes, or when the owner gets into an accident, or when the car is carnapped, that is when the car owner realizes he should have availed of comprehensive motor insurance. Otherwise, he will have to bear the full cost of damages.
Insurance coverage should not be thought of only for cars. Evaluate your current home insurance and see if it is enough. If it is not, or if you don't have one at all, by all means, get covered, include a rider for acts of God, and have peace of mind.
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