Time to think about insurance

Hurricane season is all about the right preparation and planning. Island Heritage’s claims team has some important tips.

“Like many people in Cayman, I’ve lived through a number of hurricanes and learned a great deal about managing their many challenges,” says Lauren Leupen, claims manager at Island Heritage. “Preparation is the key to survival. If a hurricane strikes, proper planning and preparation will get you through the storm and its aftermath.”

Yet complacency abounds in the Caribbean, she believes. In some cases, memories of the devastation and the inconvenience experience fade and become a mere part of historical folklore. People then lapse into the false sense of “it won’t happen to us,” she says. Instead everybody should consider the impact a hurricane can have on the average middle income home or business owner. Many may be able to handle the impact and meet the financial obligations of the minor burst pipe or burglary claim. Few, however, can boast the ability to do the same under the circumstance where all is lost, Leupen says.


Insurance for peace of mind

Insurance presents a viable tool for risk transfer and loss financing. For a small fraction of the value of your property, you are able to transfer the risk of potential loss to a third party, the insurance company, she argues, adding that the peace of mind that this affords the average property owner is immeasurable.

Of course to truly maintain that peace of mind, homeowners should give serious consideration to their choice of insurer, says Leupen. Points to consider are the financial strength and stability of the company as well as their support mechanisms to deal with catastrophic events. The company should be proactive, have adequate reinsurance to cover its policy holders and be there in the aftermath of something unexpected.

Island Heritage, in its 15th year in operation with a rating of A- (Excellent) awarded by A.M. Best Co., gives its policy holders reassurance in the face of any prospective disaster that may occur, she says. “A strong capital base, substantial reinsurance protection and high level of security allow us to provide a full range of highly comprehensive protection to all motor and property owners,” adds Jessica Babb, assistant claims manager at Island Heritage. “Industry giants such as Munich Re, Ace Tempest Re and Lloyd’s of London provide us with extensive reinsurance protection.”

Are you sufficiently covered?

Even if you are already insured, it is important to verify that the insurance covers the total property or contents value. The biggest issue that comes up in claims is under-insurance, says Leupen. She recommends that homeo

wners ensure that they have adequate coverage on their buildings by having a valuation done every year or two, before hurricane season.

In the Caribbean, insurance policies penalise under-insurance and effectively reduce the amount that is paid out in the event of a claim. In practice, the adjustor compares the insurance value to the actual value of the building and then applies this ratio to the claim. This means that the owner of a building worth $200,000 that is only insured for $100,000 would only receive half of the actual claim.

“That works proportionally,” says Leupen, “so even if your damage is only $10,000, you will only get paid 50 per cent of your claim.”

The same applies to contents insurance and means that not having adequate insurance, for example to save money on the premiums, really is a false economy.

Buildings insurance in Cayman comes at approximately 1.8 to 2.2 per cent of the property value. The cost of contents insurance is approximately 2 per cent of the insured value.

Adjusting one’s insurance to the correct property values does not mean that a completely new insurance has to be taken out, says Leupen.

“The policy will just be endorsed and increased to what your buildings or contents limit should be to adequately reflect what you actually own.

“A good practice when you take out your contents insurance is to list everything, because then you know the value that you should have and you also have a good piece of documentation that you can give to the adjustor,” she says.

“It is also a good idea to take photographs and have them stored somewhere safe, for example online.”

Deductibles

In addition to insurance limits, the size of the deductible is another important issue when considering appropriate hurricane insurance. Home

owners should enquire as to what their deductible is when it comes to a hurricane.

While it is always written on the policy schedule, some people have not read or sometimes do not properly understand it, she says. Hurricane deductibles work differently from deductibles that apply in the event of fire damage or for other types of insurance. Hurricane deductibles are a set percentage of 3, 5 or 10 per cent depending on the value of the property. Some insurers group building and contents insurance together and apply the deductible to the total amount. Any claim will only apply to the amount of damage exceeding the deductible amount.

Reporting a claim

Babb has a helpful list of steps the insured should take when reporting an insurance claim. It includes:

Take photos of any damage inside and outside of your home and/or vehicle

Read your policy and call Island Heritage to schedule an appointment with an insurance adjuster

In case of looting, immediately inform the police if property is lost, stolen or maliciously damaged

Notify Island Heritage as soon as possible, and report in writing within 30 days of the date of loss

Take all reasonable steps to recover any lost or stolen property and to secure your home and/or vehicle

Take photographs of anything that is damaged beyond repair before you discard it

Send us any letter or legal document related to the claim

Listen to the radio stations for announcements. Island Heritage will make every effort to inform you of office access and opening times, Babb says.

Secure your vehicle

In addition she has advice on how to prepare a vehicle prior to an imminent hurricane. Car owners should disconnect and remove the battery and store it in a high place. This disconnects the car’s electronics and avoids potential short cuts and increases the likelihood that the might survive minor flooding.

Cars should be parked on high ground and preferably away from trees, which can fall and cause damage. “Then remove logbooks and registrations and store them with your policies and other important documents,” Babb advises

After a storm if the vehicle has been inundated with water, the owner should not attempt to start it, but instead have it checked by a mechanic with the proper diagnostic equipment. The car’s exhaust system and the brakes will need special attention. Water may have entered the brake fluid system, which could cause the brakes to fail at a later date. Oil and oil filters should be changed.

“We at Island Heritage want to encourage everyone to get prepared as soon as possible. It’s never too early to do so”, says Babb.

“Now is the time to carefully read your insurance policies to make sure you are adequately covered. It’s a good idea to get your property independently valued to make sure you have exactly the right level of coverage,” she says. Confirming sufficient coverage for your dwelling, contents and automobiles can steer you away from future dilemmas.

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