Major home improvement projects will impact the replacement cost for an insured home in the event of damage, but according to Chris Hind, general manager, JN General Insurance Company (JNGI), many homeowners forget to notify their insurers about the enhancements they have made to their property.
“Homeowners risk being vulnerable to losses in the event of a disaster due to under insurance. An insurer provides coverage based on the cost to replace your home and, therefore, an existing coverage will prove insufficient to restore whatever renovations you made after damages were sustained. Revising the insured sum after a home improvement project will mitigate the effects of under insurance and the application of the average clause in the case of a claim,” Hind emphasised.
While noting that not all home improvement projects automatically add to the replacement cost of a home, he recommended that sums insured are revised annually to avoid the pitfalls of under insurance. If a homeowner cannot afford a property valuation to inform the replacement cost of the home, the insurer advises that one may consider obtaining a report from a loss adjuster, who provides insurance valuation services.
This report, he said, should be submitted to your insurer prior to, or around the time of your annual renewal, so that the necessary changes to insurance premium can be effected. If home improvements took place after the renewal, the premium will be adjusted with the difference.
Paul Thomas, a realtor at Thomas, Forbes and Associates Limited, agrees that major home upgrade projects will impact the replacement value of a home; therefore, home insurers should be aware of them.
“By improving a bathroom, such as adding a jacuzzi or hot tub; moving from regular glazed tiles to porcelain or mosaic tiles; or changing from a ply board countertop to granite or marble, with hard wood kitchen cupboards, can run up to $1.5 million dollars or more in cost, which will increase the value of your home.”
“Your insurer should also know if you have replaced your concrete driveway with coloured bricks, or changed your fencing from a chain link to block walls with grill, because if your home is damaged, say by an earthquake, your full replacement cost will be covered,” he added.
With an overly active hurricane season predicted for 2020, Mr Hind is concern that in Jamaica, a significant number of homes are underinsured while fewer than 50 per cent of homes are insured.
“Your home is probably your most important and valuable asset therefore you should protect it. With a major hurricane, you may have to replace a roof, windows and furniture. All of this could run into millions of dollars. Having home insurance provides the peace of mind that you can recover, if a big storm hits.”
Still fresh in minds of people in the Caribbean was the devastation of the Abaco Islands in The Bahamas caused by Hurricane Dorian, a category five storm. In September 2017, Hurricane Maria, also a category five storm, flattened Dominica, St Croix, and Puerto Rico.