Homeowners should regularly update their home insurance policies to ensure they are adequately covered should a hurricane or other natural disaster strike, according to Island Heritage Insurance Company Senior Vice President and Chief Underwriting Officer Evelyn Tibbetts-Farrar.

It’s estimated 13,000 houses in the Bahamas have been severely damaged or destroyed due to Hurricane Dorian, the Wall Street Journal reported, citing statistics from the International Federation of Red Cross and Red Crescent Societies.

It’s a situation familiar to home owners in the Cayman Islands.

“After Hurricane Ivan, some policyholders came to realize they were underinsured,” Tibbetts-Farrar said. “This can happen for many reasons.”

Among those reasons – a home’s value changes over time. Most mortgages require replacement cost coverage for financing, which is what it would cost to completely rebuild a home today.

“Replacement cost is a moving target due to inflation alone,” Tibbetts-Farrar said. “There are also many other reasons your sum insured may need changing, such as home improvements and purchasing of additional furnishings.”

Policyholders can also find themselves underinsured if they base the amount insured on an incorrect basis such as market value or mortgage balance instead of replacement cost.

“It is recommended that a professional property surveyor be engaged to carry out a replacement cost survey every few years to assist with selecting the correct value to insure,” she said.

Most standard homeowners property insurance policies in the region offer coverage for natural catastrophes, but Tibbetts-Farrar adds policy wordings can differ by insurers.

“So it is important to read your policy to ensure it will respond how you expect it to,” Tibbetts-Farrar said. “In the Cayman market, the coverage provided in respect of the hurricane peril will generally cover any loss or damage that can be directly linked to the cause of loss, whether it be caused by wind or water or both.”

Policyholders should also pay attention to any deductibles that apply and set aside funds to cover this portion of the potential future loss to ensure full recovery after an event.

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