Houses in coastal areas may find it hard to get insurance
Published:Sunday | October 10, 2010 | 12:00 AM
Cedric Stephens, Contributor
Question: My uncle and I live in South Haven, Yallahs, St Thomas. We are seeking a reputable company to provide insurance coverage for our house and its contents. Can you recommend one?
HELPLINE: The aim of this column is to provide consumers with information and advice about risks and insurance. This is done independently of any insurer or intermediary - agent or broker. Endorsing or recommending companies or their products is not part of the mission. That kind of practice would compromise my neutrality - as I stated a few weeks ago in "Estimating home-insurance cost - a job for experts".
The credibility that the column has earned with readers over the years would also be destroyed. Finally, if I ignored that mission, it could perhaps be argued that I was acting contrary to the intent and spirit of the Insurance Act 2001.
My advice will be limited to telling you how to go about getting insurance. Here are a few things to bear in mind in relation to that process. The materials that were used in the construction of your house and its location will influence whether you obtain insurance and how much premium you pay.
I do not know the area in which you live. I used the satellite imagery in Google maps to get a general idea of where the house is. South Haven was not listed. Where between Poor Man's Corner and Yallahs is the house located? How far is it from the Yallahs River? What is the distance between it and the Yallahs Ponds? What is the history of flooding in the area? Have you or your neighbours suffered losses from flooding during the last five years? Are there any streams, gullies or other rivers nearby? Insurers will want to have answers to these and other specific questions before deciding whether they will insure your house and its contents.
Premises that have a history of flooding, especially those in coastal areas, will find it very difficult to get insurance in the wake of Tropical Storm (TS) Nicole. Insurers are also very worried about the effects that global warming is likely to cause in relation to storms and hurricanes.
Some experts suggest that the infrastructure and other damage that was caused during late September to early October 2010 could be a harbinger of things to come. The flooding and damage that occured this year could also occur in 2011 and beyond. These are some of the things that insurers will think about when they examine your application for insurance - especially during the month of October.
Unfortunately, the Government does not have the funds or the capacity to supplement the private-insurance market. Property owners who are unable to buy proper coverage could, therefore, end up 'sucking salt' in the event of another Nicole.
What are the estimated new replacement values of your house and its contents? Insurers will also ask for this information. The former can be obtained by paying a fee to a building professional, like a registered quantity surveyor, to estimate the value of the house.
Calculating the replacement value of your household contents is a very tedious exercise. Fortunately, there is a partial solution. It involves the use of technology developed in association with the Insurance Information Institute, for use in the United States. Visit the website, http://www.iii.org/, go to "Know Your Stuff Home Inventory", sign up, and access free home-inventory software. It can be used to list the value of the contents of your home.
When that part of the exercise is completed, you can then estimate the value of the various items. You may, if you wish, supplement the inventory with digital photographs.
The next stage is getting quotations. One of the benefits of using this application is that you can store it online, update it, and use it to prove your loss in the event of claim.
The next major step in the buying process involves finding a broker to: (a) explain what the typical house/contents policy includes and what it excludes; (b) shop around for the best deals on your behalf; (c) recommend a reputable insurer; and (d) tell you how to go about making a claim should your house or its contents suffer damage.
Finding a reputable broker or insurer is only one of the many things that you and your uncle will have to do to buy insurance, especially because of where you live. Bear in mind also that October is a really bad month to buy house/contents insurance for consumers in the island's coastal areas, particularly after an event like TS Nicole. Insurers are in business to make money for their shareholders.
They may refuse to provide coverage in cases where they have reason to believe that the probability of loss is greater than normal.
Cedric E. Stephens provides independent information and free advice about the management of risks and insurance. egis@cwjamaica.com. SMS/text message to 812-7233.