Recently a 7.8 magnitude earthquake hit the country of Nepal which caused catastrophic damages to life and property. This predicament could not have been anticipated by anyone, as is the case with any natural calamity. They cannot be predicted and the potential devastation is unimaginable. From tsunamis to earthquakes all of us are vulnerable to the forces of nature. So is there anywhere we can hide, or something we can do to prevent such cataclysms? Unfortunately there is nothing that can be done to prevent them. But we can certainly mitigate the impact of them on our personal finance. One way to hedge the risk of natural disasters is by purchasing adequate insurance.

In this article PersonalFN explains 3 points one should consider for averting a financial catastrophe by purchasing insurance:
 

• Home insurance as a means of mitigating property risk: Home insurance would cover your house property against anything from fire to natural disasters and would provide a hedge against adverse occurrences. But while you opt for one, ensure that you read the devil in the fine print; as some insurers do not include "Act of God" such as earthquake, storm, tempest, flood, inundation and special perils at the outset.
  
  You need to buy an add-on cover at an extra premium (which may be 20-30% more or if the building is located in an earthquake prone area, even more). The insurance for such add-on coverage is for the contents in the building and the structure. The cover for the structure will pay for the construction cost of the building. In case the building cannot be reconstructed, it will pay for the depreciated value of the building after taking into account the remaining life of the building. It is vital to note that the insurer will not pay you the current market value. Nonetheless, you should always read the reinstatement clause of the policy well. This is because the market cost also includes the value of the land and that is not covered by insurance. If you are living in an apartment, then ideally your housing society should take an insurance to protect the structure against such natural calamities. This will pay for any damages to the structure.
   
• Insurance for business: In case you are in business, here too having an appropriate insurance policy which has inclusion for "Act of God" and special perils in the coverage would be vital to take, rather than repenting later and saying Oh My God.
   
• Life insurance is an added benefit: Life insurance protects family members financially in the case of unexpected death of the breadwinner of the family. And when you are covering risk to life, term insurance is the ideal. But while you depend on your life insurance, again please look for exclusions rather getting a shocker later.
   

PersonalFN is of the view that devastation in Nepal is an eye-opener for all. Having a home insurance cover and even insuring your commercial property can indemnify you from an unfortunate event. Nevertheless, while you opt for an insurance cover, ensure that it is optimal and comprehensive. With adequate insurance cover comes peace of mind; because in case adverse circumstances arise, there will still be hope.

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