When Reality Bites In Paradise - Covering Your Assets
Somewhere warm where you can retreat to whenever the north wind blows cold in the temperate latitudes, whenever you need a break from the stress of the “real” world, or just... whenever!
However, that idyllic Barbados property will represent a significant investment that, like property anywhere else in the world, is exposed to potential for loss or damage that can be expensive to repair or replace. The Caribbean, in addition to its warmth and beauty, is also subject to severe weather at times.
That calm and idyllic ocean can in a few hours be whipped into a maelstrom, accompanied by howling winds and torrential rains that typify the passing of a tropical weather system, leaving a soggy path of destruction in its wake. There does not have to be an actual tropical storm or hurricane in order for considerable damage to occur from weather.
Water damage can be the most insidious of all possible causes of loss, particularly in the tropics where the high level of humidity promotes rapid growth of mould and mildew, even without the added dampness that inevitably results from waterlogged conditions. The effects of water damage can be felt months after the actual loss, and may cause more problems that the initial water damage itself, if not properly treated. No insurance policy covers mould and mildew damage, so the faster you act following a severe water damage loss, the better the outcome.
During the particularly rainy season of the Barbados summer of 2010, there was a significant number of claims arising from flooding in the West Coast area. This is an area roughly from Holetown to Speightstown, typified by a flat narrow coastal strip that varies from two to four blocks in width, at most and home to some of Barbados’ most prestigious properties. During rainy conditions the rainwater drains down from the Western Ridge that runs parallel to the coast in fairly well defined natural channels. These channels tend to empty themselves into the sea. Except, of course, when the ocean tides, which shift the sands relentlessly up and down the coast, raise the beach levels at the mouths of the water-courses to a height that makes effective drainage difficult or impossible.
Very often, as may have happened during the weekend of October 2-3, 2010, the rough seas that usually accompany bad weather can shift the beach sands during the passing of the weather system itself, so even if you were diligent enough to clear any watercourse near your property on a weekly basis, it is unlikely to have helped much in a situation such as occurred that weekend, when approximately six inches of rain fell, mostly overnight, resulting in severe flooding to many properties near the beach.
On the other hand, tidal action and high seas may in a very short time, strip away the beach sand which forms your buffer zone, at which point the waves may roll right into your living room. The result is the same. You are standing looking through murky shin-deep water, at where your beautiful Persian rug ought to be. At this point, your insurance company will usually receive your distraught telephone call.
These scenarios, though similar on the surface, are actually handled quite differently by your homeowners insurance carrier. The former constitutes a routine flood scenario, and is normally included as a standard peril on the policy, sometimes with an increased deductible - $1,000 to as much as $2,500 - especially if the property is located in an area prone to flooding. Incursion of the sea, on the other hand, is treated as “seawave” and is usually subject to significantly higher deductibles - $5,000-$10,000 or greater if not accompanied by another peril, such as windstorm or earthquake. If it is the direct result of a peril such as windstorm or earthquake, then it may be considered as part of a loss from a “catastrophe” peril, and the deductible rises to 2 percent of the overall sum insured on the building and its contents.
If the property is located in an area that might be subject to seawave losses, your insurance company might not offer the coverage at all. Usually seawave cover has to be specifically negotiated at the time of purchasing the insurance policy. The LAST thing you want to find out is that seawave damage is not insured, as you are plucking smelly seaweed from off your sofa cushions and various creatures of the ocean from your carpets.
So before the storm, the mini tsunami, the kitchen fire, the huge tree falling across your new swimming pool, it is critically important that you go through your insurance policy with your insurance advisor to ascertain exactly what is, and sometimes more importantly, what is not covered.
Find out what your deductibles are in certain common situations, and what “add-ons” are common. Discuss your expectations, and any scenarios you feel are unique to your situation. Tedious though it might sound, a detailed inventory of your contents is a vital tool in expediting the settlement of any loss, particularly in cases, like fire or burglary, where the evidence of your possessions is not always available. It is also far easier to think about these things before you come under the severe emotional stress that accompanies the filing of a major loss.
Retain receipts; remember that those items you brought in from Miami or London should be insured for their full “landed” replacement cost in Barbados, except linens and clothing, which are depreciated annually. Electronic appliances are limited in individual value and overall, unless they are scheduled on the policy. It usually costs nothing extra to schedule them.
Artwork, sculptures, cameras and other valuable items should be valued and a copy of the valuation provided to your insurance advisor. You can obtain broader coverage on these items (including accidental damage) for an additional cost. If you are not a permanent resident of Barbados, however, you are not likely to obtain coverage for your jewellery locally. This is more appropriately insured through the policy on your main residence, in your home country. If the schedule is substantial, the conditions for insuring such items while at your Barbados residence may be onerous; a rated burgular safe, central alarm system, and so on, may be prerequisites.
In all these areas, a knowledgeable independent insurance broker can be an invaluable asset. He/ she ought to be familiar with the local insurance customs, wordings, rates, the “negotiable items” that may not be covered unless specifically requested; which insurance companies are known for the best service, the best coverage, the best rates. Ask your real estate agent to recommend a broker. That way when that claim does occur, your broker should be there to work through it with you, advising you of your entitlements and assisting with the “red tape”.
After all, you should be in Barbados to get away from the drudgery of the “real” world, not to get bogged down in it!
Richard Ince is an insurance professional with over 35 years experience in Canada and Barbados. He is a Chartered Insurance Professional (CIP) and a Certified Risk Manager (Canada).