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Climate change and insurance

By Michael F. Rellosa

THANK God we (barely) survived being pummeled by successive typhoons, but what misery and heartbreak it caused us hapless mortals. Loss of life and limb may have been minimized, but loss of or damage to our hard-earned property, our houses, our cars and our means of making a living have not. In the past few weeks ending just before last weekend, the Philippines was battered by a string of typhoons — Typhoon “Quinta” (“Molave”), Typhoon “Rolly” (“Goni”), severe Tropical Storm “Siony” (“Atsani”), Tropical Storm “Tonyo” (“Etau”), Typhoon “Ulysses” (“Vamco”) — all of them wreaking havoc on our people, their properties and their livelihoods.

How can we lessen the impact of these increasing number of unusually powerful weather disturbances exacerbated by climate change? We can risk-manage and shore up our houses, retrofitting them to withstand stronger typhoons or other catastrophic perils such as floods and earthquakes through such measures as using four-sided roofs (cuatro aguas), building on stilts to lessen the force and effect of rampaging waters, be it storm surges or flash floods, using reinforced concrete and tempered glass for windows, installing storm shutters to protect windows, eliminating eaves to strengthen wind resistance, building away from slopes and water, and adhering faithfully to building codes. These are all possible and desirable but adds to the building costs, which not everyone can afford. We can plan ahead, and once warnings are up, park our cars in protected and elevated areas to ensure that they are safe from being submerged in floods. Sandbag entrances and drains to keep flood water out of our houses. Weigh down our roofs with sand bags as well as strap all objects that can be pried loose and become flying projectiles. These may be cheaper alternatives to the former but are not as reliable.

I could go on with numerous examples. However, there is one way that we can always rely on, and this is passing all this risk and the worry that goes with it, to someone else. This is known as risk transfer or insurance. For a fraction of the cost of retrofitting, or building to exceed the code, we can pay a small price for the insurance premium and be assured that if our property (house or car) gets damaged, partially or totally, the insurer would foot the bill to either replace it or have it repaired to the condition that it was in immediately prior to the loss or damage. You are therefore assured that you would still have your property to use and enjoy.

There are a number of people though, who view insurance dimly. This I think is due to a poor understanding of how it works and what it can offer. The key here is communication and an openness to share information on both sides, the insurer and the insured. Very few insured take the time to understand their coverages and fewer still bother to read their policies, much like very few of us bother to read the manuals that come with our cars or electronic gadgets, relying instead on trial and error to get them to work. We do not have the same leeway with insurance. Once our houses or cars are damaged, and we find out we do not have the right coverage, it will be too late to do anything about it.

My advice would be to talk to an insurance professional, be it an agent or broker or the insurer himself, tell them exactly what you want to be covered against. They will then respond with what is available in the market and how much it would cost. I would also advise that you go through the fine print of your policies together. Ask questions, especially when you discuss what are and aren’t covered (coverages and exclusions). Make sure that what you want covered is written into the policy. Always remember that you have the right to make changes to the policy by advising them and asking them to endorse the policy accordingly. If it is to waive a certain exclusion, then perhaps there would be a corresponding additional premium charge. Keep all records of communication and agreements in soft or hard copies, together with the policy documents. Once happy with the policy, and with your questions answered, you can rest assured that all will be in order should the feared peril occur. No problem. You are insured.


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