The recent destruction and loss of life in Japan is a terrible reminder of how vulnerable we are to natural and other unexpected disasters. Though you can never replace a loved one, when you're in an area like this, one way to mitigate some of the financial risk is through insurance.

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When we observe a terrible disaster, the value that insurance can have really hits home, especially in the most extreme cases. We'll look at some extremely large personal insurance claims, as well as the cost of claims brought on by natural and unexpected disasters, and see when it really pays to have insurance.

The Huge Costs of the Japanese Earthquake and Tsunami
The earthquake and tsunami in Japan caused a terrible amount of destruction and a still-growing number of lost lives. Though the human loss is much more important, there were also tremendous effects on the financial markets, primarily affecting insurers with involvement in Japan and uranium-related companies. Though the insurance companies are seeing their stocks sink, many Japanese people will be counting on insurance claims to help rebuild their homes. The cost to insurers has been pegged at between $35 billion and $60 billion. If the $60 billion estimate publicized by the Associated Press proves correct, this makes the Japanese quake and tsunami nearly as expensive as Hurricane Katrina, the most expensive natural disaster ever. Whatever the figure is, it's bound to be huge and have lasting effects on insurance companies, the overall financial industry and, most importantly, the people of Japan.

Natural Disasters' Huge Costs
There are a few disasters that have insurance claims reaching astronomical numbers. It shouldn't be news to anyone that in the past year Australia has been hit with a variety of natural disasters, running the gamut from wildfires to floods. Australia's Queensland floods, which occurred in the past year, have led to more than AUD$2 billion in insurance claims, according to The Australian, with 43,755 claims being filed. This averages to be around $45,000 per claim, well worth the cost of insurance. Around half of the claims filed are for residential properties. (Before paying for coverage, find out what you need to do to ensure you get paid. See What To Do If Your Insurance Won't Pay.)

9/11's Financial Burden
When it comes to disasters and insurance claims, few things will overshadow the misery and destruction caused by the 9/11 terrorist attacks on New York's World Trade Center. According to The Guardian UK, the worldwide claims to insurance companies for 9/11 were between £25 and £50 billion (US$40.1-80.2 billion).

Car Problems
In Aberdeen, U.K. In 2007, a car-shopper was lucky to have had insurance when he took a £500,000 (US$810,000) Italian supercar called a Pagani Zonda S out for a test drive. The car was being test driven on a racing track in September 2009 when the driver was involved in a crash. The insurance company, which was the driver's not the car's owner's, filed an insurance claim for £300,000 (US$480,660) to cover the cost of fixing the car, as it was sent back to the automaker in Italy to be worked on. According to the BBC, only 10 of these cars are produced each year.

Fine Art's Huge Price Tag
It's probably not going to do you any good to insure your buddy's abstract mixed-media project from art school, but if you've got a Picasso scribbling, it's going to be worth it. Joseph Mallord William Turner, an English artist from the 17th and 18th Centuries, was the artist behind a number of famous paintings that were stolen in Frankfurt, Germany, in 1994, while on loan from London's Tate Gallery. The paintings were insured and the £24 million (US$38.5 million) claim was made to the British insurance company Hiscox. According to The Economist, insuring art was not necessarily the norm at the time, so the Frankfurt art gallery was quite fortunate in its foresight to insure these works. (Learn how to read one of the most important documents you own. Read Understand Your Insurance Contract.)

The High Price of Saving Whiskers
Pet insurance is certainly not something that all pet owners have. When you consider the emotional attachment that many owners have to their pets, it seems like a given, especially considering that most pet operations cost far more than buying a new dog or cat. According to pet medical insurance company Trupanion, pet insurance can actually save you a lot of money. In the company's list of the most expensive claims of 2010, the most expensive claim filed with Trupanion was over $22,000 for a mixed breed cat's renal failure operation.

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The Bottom Line
From auto insurance to pets, art and disasters (natural and otherwise), sometimes it pays to be insured. When you're trying to prepare for the unexpected, it can sometimes seem pointless if the unexpected never occurs, but if it does, you'll be glad if you have insurance that will cover it.

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