INSURANCE COVERAGE – WHAT YOU NEED TO KNOW

By Nigel Twohey

TSARKAs the start of the hurricane season approaches, here are a few guidelines to prepare for insurance protection. Much as many may dislike insurance and its costs, do not forget that insurers and reinsurers paid out over a billion dollars following Hurricane Ivan in 2004 – all to residents of the Cayman Islands.

INSURANCE POLICIES

To be prepared for each new hurricane season, it is vital to ensure that you have an insurance policy and that it is current, valid and up-to-date. For your home/strata and business insurance policies, you should be confident that the valuations are current and that you have insured for the correct replacement cost of your buildings. Make sure your vehicles are correctly insured and that you have identified a safe

Make sure your vehicles are correctly insured and that you have identified a safe place to park them to avoid their destruction in the event of a storm – if you have more than one car, consider parking them in
significantly different places. You will need comprehensive cover – third party will not insure your vehicles against hurricanes.

If you are a boat owner, you will need to make sure your insurance is current. Check the policy and see if you are required to remove the boat from the water or store it with a professional boat yard – policies vary and impose different rules on you. If you fail to follow their guidelines, your claim may be denied. Whatever happens, make sure the boat is tied up correctly as loose boats can cause great damage to other boats and property.


Many will remember the problems of underinsurance – this is still a potential problem and it is vital to keep your property insured to the correct replacement value.


UNDERINSURANCE

It is advisable to have a professional valuation of your home or business premises at least every three years and to make sure your insurance coverage reflects that amount.

Many will remember the problems of underinsurance – this is still a potential problem and it is vital to keep your property insured to the correct replacement value. Most homeowner insurance policies in Cayman have an 80 or 85 percent coinsurance clause. This means that you can be 20 or 15 percent astray in the valuation and you will not be penalized. However, if the replacement is more than that leeway, then you will receive only a portion of the payout you would expect. It is better to be prepared and be insured for the correct replacement amount. Ask the valuer to include a section in the valuation for Insurance Replacement Cost.

CONTENTS

If you insure the contents of your home, make sure you have a proper inventory of your possessions. Most local insurers have detailed lists to guide you through your home and its contents – just ask or go online for the forms. In many homes after Ivan, people had insured $20,000 of contents (a very popular
figure) – many people had more than $20,000 in their front halls before venturing to any other room. Some dedicated homeowners have photos and video of their possessions with receipts lodged with their insurers.

HURRICANE-RESISTANT GLASS/SHUTTERS

Test your shutters and generators to make sure that they work, long before the hurricane track puts Cayman in the spotlight. These items protect your home and family and make life more bearable.

Shutters and, more recently, hurricane proof glass – for speeds up to 150 mph – are now fairly standard in Cayman. You may not receive a credit for having them, but you may receive an extra cost for not having them. In many new homes, the hurricane-resistant glass is almost universally installed. Older
homes can benefit from shutters.

Alan's hurricane pix 040PRICES

What a difference 10 years makes. We are finally seeing property insurance prices dropping by meaningful amounts. After 10 years of very high rates, prices are finally falling to around pre-Ivan levels. Insurers and reinsurers paid out around $1 billion for Ivan in 2004 and many millions for Paloma in 2008. With no major insured catastrophes for the past few years, the insurance prices globally, and specifically in Cayman, are now falling. That is the good news.

The bad news is that, although we have been spared since Paloma in 2008, it is no reason to let your guard down. We must still prepare for hurricane season each year, watch the news and visit the hurricane tracking sites during the season. The Internet gives us no excuse for lack of preparation; unlike our forebears who only knew of an impending storm when the barometer dropped or the crabs invaded the land.

CLAIMS

If we do get hit by a storm and you have damage, then you need to report it to your insurance company as soon as possible after the event has passed – most policies give you 30 days. You also have to be prepared to have your life invaded by hordes of loss adjusters assessing your claim. It’s not a pleasant
experience after a disaster – but, sadly, a necessary one, and keep in mind that they are here to help you.

If you need more specific advice, your insurance company or broker will be happy to assist you.