Insurer: Earthquake coverage a must

Several sinkholes appeared throughout the islands following the 28 Jan. 7.7 magnitude earthquake. - Photo: Taneos Ramsay

The 28 Jan. earthquake that struck Cayman not only rattled the island, but property owners as well, as local insurer Island Heritage has said it noted an uptick in queries about earthquake coverage.

“We have fielded a higher volume of queries relating to existing customers seeking to verify that an earthquake is covered under their policy,” said Island Heritage’s senior vice president and chief underwriting officer, Evelyn Tibbetts-Farrar.

In response to queries from the Cayman Compass, Tibbetts-Farrar said that despite the queries, the insurance company has not experienced an abnormal increase in requests for property insurance quotations since the 7.7 magnitude earthquake.

Earthquake aftermath impact

The earthquake was felt in Cayman, Jamaica, Cuba and South Florida.

There were no reported deaths or major structural damage.

The US Geological Survey reported at least 28 aftershocks in the vicinity of the Cayman Islands following the 28 Jan. earthquake. The last aftershock was recorded on 2 Feb.

A tsunami warning was issued within minutes of the earthquake. In the aftermath of the seismic event, thousands of motorists were stuck in traffic in George Town as they tried to get out of their workplaces and head to local schools to collect their children and to their homes to check their properties.

Hazard Management Cayman Islands, Premier Alden McLaughlin and local lawmakers expressed concern over the widespread gridlock, and committed to increasing efforts to educate the public on what to do during and after an earthquake and in response to tsunami alerts.

A number of sinkholes were reported across all three islands. The Water Authority sustained some damage to its underground pipeline network, and in the hours following the earthquake it conducted rolling service interruptions to assess and carry out repairs. Some of those repairs are still ongoing.

Most properties on the islands fared better.

“Fortunately, it appears that very few properties incurred structural damage after the January earthquake,” Island Heritage’s claims manager Patrice Myles said.

She added that reported property losses following the earthquake require damage assessments, adding, “The extent of said assessments will largely fall to the magnitude of the damage sustained.”

Tibbetts-Farrar pointed out that in the Cayman market, most full-property-cover policies come with earthquake coverage, including floods or overflow of the sea caused by an earthquake “since most banks require full coverage in order to meet the requirements for a mortgage”.

She pointed out that an exception to this would be a policyholder specifically asking for that clause to be deleted.

“However, this is rare,” she said.

What should homeowners look for with insurance coverage?

For many homeowners, the possibility of another earthquake still remains a matter of concern.

Tibbetts-Farrar suggested that customers, in addition to ensuring that their policy has earthquake cover, should ask key questions to make sure they are protected from losses.

When shopping around for a policy, she said, it is important to ask “whether this extends to cover flood, tsunami or overflow of the sea caused by the earthquake, and what the deductible is relating to these perils”.

The deductible is the amount the policyholder will be responsible for paying in the event of a covered loss.

“Deductibles tend to be higher for catastrophe losses that affect a large proportion of the pool of policyholders versus events that affect a single insured or small amount of policyholders simultaneously, such as a house fire,” Tibbetts-Farrar added.

Myles said before picking an insurance policy customers should make sure the perils covered meet desired needs, as well as those of any other interested party, such as their bank.

“Know your deductibles, so you understand how much of any loss you will be responsible for, and always be sure that your sum insured represents the current replacement value of your property to avoid under-insurance penalties,” she advised.

Structural assessments

Myles said when it comes to structural assessments, those are largely down to the scale of the damage.

“We would encourage clients with material structural damage to insured buildings/property to photograph the evidence, as it may worsen over time, and to secure the services of a structural engineer to survey the damaged area,” she said.

Once the scope of the damage is assessed by the engineer, Myles said, property owners should obtain repair quotes from a contractor.

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  1. Hardly anyone can afford it in the US, even in the area where the strongest ever in North America earthquake hit in 1964. It is not mandatory, for it is very expensive.

    People rely on strict building codes that are enforced. November 2018 earthquake in Alaska caused significant damage to buildings that were outside of the buildings “safety area” due to lax oversight.