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Definition: Catastrophe Insurance
A catastrophe insurance insures an individual’s business or any personal assets against natural disasters and calamities. A catastrophe insurance as the name suggests, gives an assurance to an individual’s business by reimbursing for the losses that he may have incurred due to a natural disaster like earthquake, hurricane, flood, avalanche etc.
Most of the regular insurances that are available do not include such natural calamities which are treated as an ‘Act of God’ as well as man-made ones like a fire, bomb-blast or any other terrorist activities. However, a catastrophe insurance may not be able to estimate the exact losses as once affected by a calamity, it makes it difficult to estimate the exact amount of losses the firm or the business may have incurred.
For Example, a person owning a wholesale or a retail store may take a catastrophe insurance. In case of a calamity which results in a damage to his physical assets of his business, he may make use of the catastrophe insurance in order to claim for the damages due to the disaster.