Hurricane Insurance
An Expensive Risk
The Bahamas is located in a catastrophe-prone area. Hurricanes may affect our islands for half of every year and they can produce wind gusts of up to 200 mph along with torrential rains and tornadoes.
Recent hurricane activity has increased the cost of reinsurance for Bahamian insurance firms. In the last dozen years we have suffered five major catastrophes causing insurers to pay out hundreds of millions of dollars in claims.
This has led to sharply higher premiums for hurricane coverage, as well as a higher excess – the 2% deductible that policyholders must pay out of their pocket following an insured event. Some reinsurers are considering withdrawing from this market altogether because of the high risks and relatively low volume of premium that can be derived.
Some homeowners have elected to drop hurricane coverage and self-insure their property. Others have tried to limit premium costs by excluding items such as foundations, swimming pools and satellite dishes.
Your home is your biggest investment in life so it follows that you should do the best you can to protect that investment. That means ensuring that all construction is to code, installing storm shutters and emergency equipment, and taking other precautions.
In particular, you should review your insurance policy in advance, as no application for coverage will be accepted, or increased, once a hurricane watch has been issued for the Bahamas.
In your review, you should consider the replacement cost on all property, including contents, the level of deductibles (usually 2% of the sum insured) and any exclusions.
Other factors to consider are whether your policy covers flood, wind and storm damage as well as relocation or temporary housing if your home is made unlivable.
