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Understanding Insurance: A Deep Dive

After an incredibly damaging 2017 hurricane season, we take a look at how insurance claims were and are being processed and how to prepare for the future

Insurance claims of any kind are not often favorite topics of conversation, let alone needing to delve into the process on your own behalf. But after any damage to your property, the insurance issues that may arise are often necessary items that must be taken care of swiftly and with attention to detail. Due to the magnitude of the 2017 hurricane season and massive destruction of Hurricanes Irma and Maria, the residents and businesses of the BVI are dealing with insurance issues like many have never seen before. We’ve interviewed a number of experts in this field to address how insurance claims had been filed after the hurricanes, some difficulties that some have been facing and the confusing and complicated nature of the industry.

If you’ve experienced hurricane damage to your home or business property, now is a good time to pause, reassess what damages and claims have been filed, are in process or completed. And because the 2018 hurricane season is underway, it’s also a good time to continue to prepare for the future.

2017 Insurance Issues

The sheer magnitude of a Category 5 hurricane and its damaging effects on any property and the local landscape, one major issue facing both homeowners and insurance companies is the sheer volume of cases needing to be addressed. If a tree were to fall on a home after a storm, it may only affect one person, therefore a claim may be able to be processed rather quickly. But when an entire Territory of properties – many of which may be total losses – are needing claims to be processed, there is bound to be a backlog.

“A main problem people have encountered has been dealing with the settlement process of their claims and therefore getting access to funds to facilitate the rebuilding process,” said Ben Butler, Director for BCQS International, located in Tortola.


Many have expressed confusion as to why their settlement claims were less than what they thought they were insured for. Most property insurance policies include this average clause. This clause is invoked with the amount the property is insured for is less than the true cost to rebuild.

“Most policies offer a cushion of 15-20%, meaning that if your property is insured for an amount less than the cushion, you will only receive a portion of the claim,” said Simon Cross, Insurance Associate with Hyperion Risk.

Another major issue facing property owners is underinsurance. Underinsurance occurs when a home or property is insured, but the coverage limits may not be enough to cover all costs of damages incurred. Therefore, when a claim is filed, inadequate funds will be supplied to repair or rebuild. The effects of underinsurance on claims are significant in the BVI, and why many property owners aren’t getting the funds they feel they deserve to rebuild. Being underinsured, and thus receiving a lower-than-expected claim settlement can also cause issues when rebuilding.

Some aren’t able to adequately rebuild homes and businesses with the safest materials and essentially cut corners to save money, thus compromising the structure and beginning a nasty underinsurance cycle.

Another major issue is the lack of building supplies. Any available materials are bought up quickly, creating a bottleneck of needs amongst the masses of people needing to rebuild. It takes time for materials to reach the Caribbean, adding even more time to the rebuilding process. Contractors are also in short supply, and those that are able to help are overwhelmed with projects and booked up for months.

After all is said and done, many people didn’t have any insurance, and some who thought they had enough insurance in fact did not. Preparation is key when considering property insurance and making sure each home or business is adequately assessed by a qualified Chartered Surveyor. While this service isn’t cheap, it will certainly cost less than having to completely replace or rebuild a home with inadequate insurance settlement claim funds.

How to Address Future Issues

By commissioning a qualified chartered surveyor to prepare a reinstatement cost valuation for insurance purposes, a property owner is taking the steps needed to ensure they will be buying enough insurance in the unfortunate event of a total loss. Hurricanes are not the only events that can cause damage or loss. A fire or flood are other considerations to make when purchasing insurance.

“It makes sense that if you’ve had an assessment within the last three years, you should be good. You’ll be able to show the insurance company you’ve made an attempt to be adequately insured,” said Simon Watson, Partner at Charterland chartered surveyors.

After the reinstatement cost valuation is completed, this number will help dictate what kind and how much insurance is needed.

Insurance documents are legal and binding, and worth looking over carefully, with a lawyer or insurance intermediary if necessary, to ensure the policy being purchased does indeed cover everything it should. Attention to detail is needed so that any policy exclusions and deductible levels are fully understood.

“It is both the insured’s right and responsibility to question and query any elements of the policy wording that they do not understand. Further consideration should be given to the qualification and applicable experience of the insurance personnel assisting insureds. The provision of clear and concise information and competent advice should be an absolute must. These issues highlight the importance of working with a professional insurance intermediary who can prevent these issues before they occur,” said Simon Cross of Hyperion Risk.

Another factor to consider when purchasing insurance: the financial strength of the insurer. If the insurance company isn’t on solid footing, it could greatly affect their ability to pay a claim. In addition to a solid financial foundation, you should know how well the provider could deliver services should a huge number of claims come in at once, in the instance of a natural disaster such as a hurricane.

Top 10 Tips for Moving Forward

  1. Hire a Surveyor

A qualified Chartered Surveyor can help obtain an accurate reinstatement valuation.

2.  Photograph Everything

Having photographic evidence of your home or building in detail can help you prove the true value of the property. This evidence, in conjunction with an accurate reinstatement valuation will be your best weapons when making an insurance claim.

3. Get Enough Insurance

Don’t be underinsured. Explore different coverage options and deductibles. Ensure that the amount you’re insured for is noted accurately on your policy.

4. Get the RIGHT Insurance

Tailor the insurance policy to cover what you need – this could even reduce your premium. Communicate with your insurance provider and be happy with what you purchase.

5. Choose the Right Insurance Company

Understand your insurer’s role and ensure they are appropriately licensed. Don’t forget to understand their financial standing and ability to pay claims.

6. Be Mindful of “Quick Fixes” – and Fixers

After a disaster, companies sometimes come in from outside the Territory in order to provide “claims and adjustments” help. Be sure you know who the company is working in favor of – you (the claimant) or an insurance company or something else.

7. Review Documents

Take special care and review all insurance policy documents and agreements carefully. Make sure they say what you think they should and that you have all the information you need before signing.

“Communicate with your insurance provider. Remember, you’re paying them for a service, so make the best use of it,” said Cross.

8. Be Prepared

Once armed with adequate assessments, preparing for hurricane season in advance is extremely important. Look beyond the typical means of securing windows and other items and obtain expert advice to find any potential property weaknesses. While no one can know the ultimate power of Mother Nature, adopt a “prepare for the worst, hope for the best” mentality.

9. Photograph Damages

In the event of a natural disaster, photograph damages as best you can. This will be a helpful comparison to your previous photo documentation and may help in a claims dispute.

10. Ask Questions

Don’t be afraid to ask questions. If there is something that you don’t understand or doesn’t seem right, get the answers you need. A quality insurance provider should be able to tell you everything you need to know.

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