A catastrophe is defined as an unexpected event that will cause significant damage or a high amount of suffering with that damage. That means this event will cause serious difficulty for a particular person or maybe for a group of people. During the1700s its definition was extended to mean “Any sudden disaster”. But nowadays it refers to very tragic and more minor events.
Catastrophe in Insurance:
This is a type of insurance that will protect the home or other structure mainly from natural disasters like floods, hurricanes tornados, volcanoes, earthquakes, etc. Sometimes several different types of insurable catastrophes are not required separate coverages. Some are mainly included in the homeowners, renters, and auto policies and sometimes we need a separate coverage of policy for the same.
The list of disasters that can be covered by catastrophe insurance is mentioned below:
Earthquakes: This coverage may be included in the policy for low-risk areas but sometimes we need to take special coverage for high-risk areas.
Windstorms and Tornadoes: This coverage is typically part of the homeowner’s insurance policy. This insurance is mainly useful for Great Pain areas and central state areas which is also called Tornado Alley.
Tropical Storms: This coverage usually exists in the typical homeowner policy but especially for certain high-risk areas users can typically get a separate policy for this coverage.
Hailstorms: This coverage can usually be covered in the common Homeowners and Auto Policy. In an Auto policy, coverage of hailstorm damage on a car can adobe handle through comprehensive coverage if the car is damaged at the time of the storm.
Flood: A separate policy needs to take to cover flood insurance for homes and that is usually applied to those who live in flood plains. In the case of auto policies covering vehicle flood damage can also be a part of compressive policy coverage.
Natural disasters affecting the Pacific Coast: The Western United States or pacific coast areas are most risky for earthquakes, wildfires, and heavy winter storms which can lead to flooding. Since all the perils are not covered in the standard homeowner’s policy, additional catastrophe insurance may require in this case.
There are so many other disasters that can lie under the Catastrophes. These need separate insurance sometimes to cover.
Catastrophe insurance Vs Hazard Insurance: Hazard insurance mainly considers the “Act of God” Events like volcano eruptions, lightning, tornados, etc. The section of General homeowners policy may cover all these things.
Whereas, Catastrophe considers the coverages those are applying to man-made disasters as well as natural. This mainly refers to a stand-alone policy that is separate from the regular homeowner’s policy.
Where we can find the details related to Catastrophe in the AL3 file?
As we know Catastrophe directly relates to the loss that is happened with any disaster. So the details of Catastrophic loss or any other loss can be found in the “Loss History Group” of an Al3 file.
In this group, we can get the details of whether this loss happened with a Catastrophe event or not by using indicators. The main description of loss (Catastrophe loss) can also be stored in another existing element of the same group.
A particular number will also be assigned to a catastrophe occurrence, which will also be stored in the one on the element of “Loss History Group” in an AL3 file.