[KH Explains] Rundown of insurance coverage for damage from heavy rains, floods

Insurance plays critical role in managing risks, preventing devastating financial loss after natural disasters

(123rf)

Days of torrential rains have wreaked havoc across much of South Korea, shedding light on the importance of insurance coverage, which can help secure personal and business assets, as well as minimizing significant financial losses.

As of 6 a.m. Tuesday, 1,486 cases of property damage had been reported to authorities -- 912 involving public facilities and 574 for private property -- according to the Central Disaster and Safety Countermeasure Headquarters.

Storm and flood coverage from private insurance companies operating under the jurisdiction of the Ministry of the Interior and Safety will compensate for properties affected by natural disasters after a weather warning or advisory is issued. Such coverage includes damage caused by typhoon, heavy rain, flooding, strong winds, tsunami, snow or earthquake.

The types of properties that qualify for such insurance coverage include residential single-family and multifamily homes, greenhouses used for agriculture and forestry purposes and shops or factories run by small business owners.

Both property owners and tenants are eligible to apply for the coverage. Generally, the government and local authorities cover between 70 and 92 percent of the cost of the insurance premiums, while full-cost coverage has been available for low-income households since 2022.

Property owners and tenants can also benefit from taking out fire insurance from private insurance companies, many of which also include storm and flood coverage. Those with this insurance will be provided comprehensive protection against damage caused not only by fire, but also various weather events.

For crops and farmland impacted by the weather, farmers can take out crop damage insurance through the Ministry of Agriculture, Food and Rural Affairs, which covers damage to crops caused by natural disasters to ensure stable business management for farmers or firms in the agricultural and forestry industry.

A bean farm in North Jeolla Province is damaged after heavy rainfall swept the nation over the weekend. (Yonhap)

The ministry also operates disaster insurance for livestock that offers insurance coverage for the loss of specified animals and herds as a result of natural disasters to guarantee income for livestock farmers.

The insurance scheme for aquaculture products run by the Ministry of Oceans and Fisheries aims to support fishers hit by natural disasters and weather events, including sudden temperature changes, typhoons and red tides. The state-backed system subsidizes 50 percent of the premium to fishers affected by natural disasters.

Comprehensive auto insurance can come in handy for vehicle-related flood fatalities, amid heavy rain and flooding.

Car insurance payouts are determined by the value of the car a driver was using before the damage occured. The insurance company covers an amount based on guidelines under the Korea Insurance Development Institute.

Foreigners residing in Korea can benefit from general insurance and car insurance just like Korean nationals, and insurance subscriptions can be made after issuance of the Alien Registration Card, according to the KIDI.

However, the General Insurance Association of Korea said there could be restrictions for foreign residents who have stayed for less than six months in Korea, as it could be difficult for insurance companies to check one’s sojourn status. It added that foreigners are eligible to apply for all forms of insurance, although the specific terms and conditions of insurance could differ.

By Park Jun-hee(junheee@heraldcorp.com)