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Are you insured against “the big one?”

Right now it’s difficult not to talk about and think about what’s going on in Japan. Reuters is reporting that in the 1.8 mile band along the coast that was most affected by the earthquake and tsunami, there’s about $24 billion in insured property. In the four prefectures hardest hit, the total is about $300 billion.

Unfortunately it will likely be weeks before an accurate estimate can be achieved and who knows how long to repair the damage. Some of the risk modeling firms interviewed for the Reuters piece said getting an accurate damage figure may be impossible because no one anticipated an earthquake of that magnitude in that location. The last one in that area was 30 years ago and it was eight times weaker.

The economic losses are estimated to be in excess of $100 billion, but that figure is likely to fluctuate as damages radiate outward in the weeks to come — for instance a contracture of available auto parts to assembly plants in the United States and a likely shortage of consumer electronics made in Japan.

In the context of what we discuss here, you have to ask yourself, am I insured against the most likely disasters in my area? People who live in regions with an earthquake risk (think California) already know you have to carry special earthquake insurance. Homeowners, did you know your homeowners policy won’t cover flood? Or that if you live on the Gulf Coast you have to have a separate wind policy? If you survived Katrina you know that insurance game. No wind coverage? Oh, your home wasn’t destroyed by flooding, it was the wind. No flood policy? Oh. The wind’s to blame.

With no desire whatsoever to in any way “capitalize” on the misery of others, take away an insurance lesson from the catastrophe in Japan. Are you adequately covered in the event the unthinkable occurs?

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