Dear Heather

Hurricane season is coming I want to make sure my family home is properly insured.

How much should my house be insured for and what does it cover?

Hurricane Harry

Dear Hurricane Harry

Your home should indeed be insured! If you have a mortgage your bank will certainly require you to have insurance and require proof each year that you have renewed it. Insurance should cover 100 percent of the replacement value of your home — not the market value, but the value of the bricks and mortar, or rebuild cost. This can be ascertained by way of an official appraisal by a certified appraiser, or can be done for no charge by the insurance company. This amount should be reviewed annually to see if building rates have increased, but will only need appraising again if you increase the square footage of the home.

If you don’t have a mortgage, it is not mandatory to have insurance, but it is prudent. The question you should ask yourself is, how would you afford to replace it if something happened? (i.e., a fire or other catastrophe) If you own a condominium, insurance is covered in the maintenance fees, but you should still carry contents insurance for your belongings.

Building insurance typically covers damage to buildings by a wide range of causes including fire, lightning, storm, hurricane, flood, earthquake, leakage of water or oil, riot, malicious persons, theft, falling trees and impact by vehicles.

Some may cover loss of rent or the cost of renting alternative accommodation if the house is damaged to the point of it being unliveable. However, no insurance company can cover everything and each policy can vary, so read the fine print and ask your insurance representative to explain anything you don’t understand. For example it is rare that docks, piers and jetties would be covered under normal house insurance, although an extended policy may allow for some coverage.

If your house is damaged by a hurricane, follow these guidelines:

1. Take pictures, and secure the property as quickly as possible with a tarpaulin or other protective item to prevent any further damage.

2. Call the insurance company who will try and get a representative out to review the property within 48 hours if possible. Meanwhile, obtain estimates for repairs and submit. Two estimates is the norm, but it may not be necessary to obtain more than one estimate if they deem it fair and reasonable.

3. Hurricane or earthquake damage usually has a deductible, and depending on the quality or amount of coverage, the minimum deductible is likely to be about $2,500.

4. The homeowner can pay the deductible to the insurance company, whereupon the insurance company will handle the repairs, or they can pay the deductible to the contractor once work has been completed, and the contractor can bill the difference to the insurance company.

As a very rough estimate building insurance costs approximately $400 per $100,000 value, per annum, and also covers anything that is an integral part of the house like shutters, windows, kitchen cabinets, lighting, wood floors et cetera.

It is worth bearing in mind that all personal belongings can be added as a separate section into your home insurance policy. This covers things like clothing, jewellery, and electronic equipment. The rate is slightly different for contents and is currently about $60 for each $10,000 worth of items covered per annum. Most insurance companies do not require a detailed inventory, however it is a good idea to list and take pictures of your valuables. Some insurance companies even offer a handy prepared form to assist you with this.

Be smart this hurricane season, and in preparation, make sure your coverage is adequate and up to date!

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Heather Chilvers is among Coldwell Banker Bermuda Realty’s Leading Sales Representatives. She has been working in Real Estate for 25 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332 1793. All questions will be treated confidentially.