Nandini Subramanyam's home was hit by the Mumbai floods last week. As the water level rose, she found the mattress, cupboard and the storage bed and other furniture including electronic goods floating in water. She was forced to spend a couple of days at a hotel.

Subramanyam is just one of the thousands of Mumbaikars who were affected by the flood. Unfortunately, she will not be able to claim insurance money against most of her belongings she chose to dispose off. In order to claim insurance against any policy, it is imperative to have some proof of a loss.

"Our surveyors have to come and take an inventory of the situation before claims can be settled," said J K Gupta, general manager, the New India Assurance Company.

Terrible Tuesday: Mumbai copes with a calamity

Policyholders who have taken a household policy that also insures against the contents of the home, would be wise to salvage the damaged appliances and furniture.

This explains why many mattresses are still lying outside in housing colonies as pepole would not like to dispose them off until the surveyor comes for an inspection.

Television sets, fridges, washing machines and music systems too have been destroyed by the rain water that seeped into many homes at Kalina, Kurla, Andheri, Sainaka and other low-lying areas in suburban Mumbai.

With limited resources to visit individual homes, some private insurance companies want their customers to undertake their own documentation.

"In this day and age, every home has a camera and some of the mobile phones are even fitted with a camera. We are advising our customers to do the documentation of goods before they throw them," says Kamesh Goyal, CEO Bajaj Allianz General.

While householder policy covers building and contents, customers should be aware that 5 per cent of the claim amount is excluded when a claim arises out of Act of God perils. This means that in the case of Mumbai floods, the first 5 per cent of the claim amount would have to be borne by the insured.

Mind you, even to avail of this, an individual should have opted for fire cover under the householder policy that includes flood as well. Many individuals do tend to buy a burglary policy, which would exclude fire and allied perils.

What is a policyholder entitled to in the event of a claim under his householder policy covering fire? The sum insured, which is the value denoted for insurance, can be paid either on the reinstatement value basis or on the basis of their market value.

This essentially means that a policyholder can get back "new for old" if he opts for the reinstatement value. Under the market value basis, the insurance company applies depreciation when settling claims and hence older the appliance, lesser the money one gets.

In the event of wall units or other furniture fixed to the walls, policyholders would have had to include this in the value of the building, provided that the building is insured. Many of the housing societies have suffered damages to their walls, pumps, and other structures. Fortunately, as per the laws laid down by the Maharashtra government, all societies have to be insured.

"There have been claims put in by various housing societies for repair of their walls. These would involve claims in the region of about Rs 50,000," points out Ritesh Kumar, head of risk & reinsurance, ICICI [Get Quote] Lombard.

The central government has declared priority to the settlement of their claims over and above motorists whose cars have been submerged.

With thousands of cars having been affected and service stations running full, it will be impossible to ensure settlements within a week. Another major hindrance has been the non-availability of spare parts considering the large-scale damage caused on account of the floods. The four state general insurance companies have received over 2,000 claims from motorists, which could well total Rs 15 crore (Rs 150 million).

An insured motorist must watch out for certain things. First, there is the deductible amount depending upon the engine capacity of a car. For cars having a cubic capacity up to 1,000, the deductible amount stands at Rs 500.

For larger engine capacities in excess of 1,000 cc, the first Rs 1,000 is deducted from the claim amount and car owners are to bear this cost. For commercial vehicles, irrespective of the engine capacity, a deductible of Rs 1,000 is charged. However, the insured could have also opted for a higher voluntary deductible.

Public sector insurance companies claim that the average cost per car would be in the range of Rs 10,000-20,000. Private insurance companies place the cost per claim to be higher but officials at service centres put the figure at well over Rs 50,000 for each car.

The insurance companies, however, will not pick up the entire tab. Vehicle owners will end up with a fair share of the burden, simply because certain components in a car are not fully insurable.

For instance, insurance companies automatically deduct 50 per cent depreciation on all plastic and rubber parts. This would include headlights made of fibre or plastic. This means if a spare part made of this fibre costs Rs 1,500-2,000, the vehicle owner would end up having to shell out 50 per cent of the cost, and balance will be picked up by the insurer.

Insurance companies allege that just about 7.5 to 10 per cent of the cars affected would have been fully submerged in water. Car service stations say otherwise. Eighty per cent of the vehicles towed in are damaged.

"The cars that have come for servicing and repairs are far from routine. Seats are entirely wet, submerged in water and mud. We are trying to suck out the water by using wet vacuum cleaners," says Praveen Yadav, owner of J P Auto World, a service centre of Tata Motors [Get Quote] at Borivali.