Property/Homeowners FAQS

  1. Help! I've lost everything! Where do I start?

If most of us suddenly lost all our possessions due to some calamity, we would be hard pressed to know all that was gone. When was the last time that you listed all of your furniture, electronic equipment etc?

How much is it all worth and where would you start if you had to replace it? Now is the time to make a list of major household items and possessions. Just remember that, where possible, to list the serial number, date and cost of purchase, and even include the receipt if you can. Another easy way to inventory your home is to use a video camera or take photos of your home and its contents. Using a video also lets you record information about the items and their date and cost of purchase. Whether your record is on film, video or paper, have a copy made and ask a friend or family member to keep it. Or store your copy in a safe deposit box so the inventory record will be safe at another location.

Example #1 UNDER INSURED PROPERTY

Actual Market Value: $250,000

Sum insured (given by owner): $100,000

Loss following a fire: $100,000

Amt. Payable: $100,000/$250,000 x $100,000 = $40,000 (note that this is lower than the actual loss)

Example #2 INSURED PROPERTY (at market value)

Actual Market Value: $250,000

Sum insured (given by owner): $250,000

Loss following a fire: $100,000

Amt. Payable:$250,000/$250,000 x $100,000 = $100,000

Difference in claim payment: $100,00 - $40,000 = $60,000

Remember, the only way that you can absolutely be sure that your property is valued at the correct value is by performing a periodic valuation. It is also very important that one be done after any renovations or improvements.

2.   I want to be sure that if my house burns down, I would be fully able to replace my valuables. Can I insure my property and contents for more than their value?

What is being described above is called OVER INSURING. This is not advised since insurance coverage is based on items’ Current Market Values. Consequently, claim settlements are based on the lost or damaged items’ values, adjusted for ‘wear and tear.' Any settlement would be based on reinstating the insured back to the position that he or she was in before the loss or damage (preferably with items of the same type or kind). What this means is that no person should be able to benefit financially from a claim by receiving more than what he or she had before the loss. Thus, over insuring property and valuables does nothing to further benefit the insured, in fact, what such a practice does, is that it causes, the insured, to pay more premium than is really needed. You can however select the ‘Reinstatement as new’ option (New for Old) which allows you to insure at a value that represents the cost of replacing the items as new. No adjustment for wear and tear is made on a claim in such circumstances.

Alternatively, some persons may try UNDER INSURING their valuables in an attempt to pay lower premium. What happens in this circumstance is that the person seeking insurance would purposefully insure for a value less than its market value. This is highly detrimental to the insured since the settlement received in times of a claim would be based on the ‘low’ sum insured. The consequences of under insuring items can best be described using a numeric example. The examples employ the Law of Averages as used by insurance policies. They show that it is always best to insure at replacement value.

 

Example #1 UNDER INSURED PROPERTY

  • Actual Market Value: $250,000
  • Sum insured (given by owner): $200,000
  • Loss following a fire: $100,000
  • Amt. Payable: $200,000/$250,000 x $100,000 = $80,000 (note that this is lower than the actual loss)
  • Example #2 INSURED PROPERTY (at market value)
  • Actual Market Value: $250,000
  • Sum insured (given by owner): $250,000
  • Loss following a fire: $100,000

Amt. Payable:$250,000/$250,000 x $100,000 = $100,000

Remember, the only way that you can absolutely be sure that your property is valued at its current market value is by performing a periodic valuation. It is also very important that one be done after any renovations or improvements.

3.  Who decides how much my property is worth?

An Evaluator or Appraiser. The common methods are:
Actual Cash Value
The replacement cost of the item minus depreciation. For example, a new television set may cost $500. If your 7-year-old TV set is damaged in a fire, it may have depreciated 50 percent. Therefore, you would be paid $250 for that set.

Replacement Cost Coverage
The cost of replacing an item without deducting for depreciation. For example, today's cost for a TV set with features similar to the 7-year-old set damaged by fire would determine the amount of compensation. If the new replacement set costs $500, that will be the replacement coverage.

  4.     What is the procedure for making a claim?

  • Make a report to the Police.
  • Notify your Insurance Company.
  • Make an accurate claim on the basis under which the articles are insured i.e. indemnity or reinstatement. Remember that honesty is the best policy.
  • Present bills, photographs, proofs of purchase/ownership of lost articles in support of your claim.

  5.     What perils are covered in contents and building policies?

  1. Fire, Lightning, Explosion.
  2. Bursting and Overflowing of Pipes and Water tanks.
  3. Burglary, Housebreaking, Theft or Larceny.
  4. Damage by Aircraft.
  5. Impact by Road Vehicles, Horses or Cattle
  6. Strikes, Riots, Malicious Damage.
  7. Hurricanes, Windstorm.
  8. Earthquake (not covered under standard homeowners’ insurance policies)
  9. Flood
  10. Damage to property caused by falling trees.

6.   What is the difference between "General Contents" and "Specialised Contents"?

"General Contents" are all your household possessions, e.g. electrical appliances, furniture and fittings including your clothes and food stuff.

"Special Contents" are those articles that are considered to be high risk items, e.g. electronic or digital equipment, cameras, stamp/coin collections or heirlooms. These need to be listed with separate sums insureds. 

7.   Do I need earthquake coverage?

Direct damages due to earthquakes are not covered under standard homeowners’ insurance policies. However, unless you live in an area that is prone to earthquakes, you probably do not need this coverage. If you do live in a part of the country with earthquake activity, you may want to consider adding an earthquake endorsement to your homeowners’ insurance policy. This endorsement will cover damages due to earthquakes, landslides, volcanic eruptions and other earth movements. 

8.   Do I need flood coverage?

Often, flood insurance is required as a condition of granting a mortgage loan if your home is in a special flood hazard area. Even if you live in a low hazard flood area your property may still be at risk. Each year, about 35% of all flood claims paid are for property located outside high-risk areas. The good news is that there is a Preferred Risk program that offers substantial premium discounts for homes located in low hazard areas. If you think your home is at risk, you might want to consider purchasing flood insurance. Or you can check out special flood insurance maps published by the ODPM. These maps (which indicate a community's flood hazard areas and the associated degree of risk) are usually kept on file at your local town hall or county building and are available for your review.

9.   What steps can an insured take to minimize the risks of theft, fire, hurricane or flood?

For Theft:

  • Security Lights-every house needs them.
  • Watch Dogs-every home should have at least one.
  • Home Security Alarms-it doesn't hurt to install one.
  • A properly fenced yard should come with your property.

For Fire:

  • Make sure you own a fire extinguisher.
  • If you do own a fire extinguisher, have it serviced regularly.
  • Put matches out of sight, out of mind of children.
  • Don't smoke in bed.

For Hurricanes:

  • Observe all hurricane warnings.
  • Install removable wooden shutters for glass doors and windows.
  • Install hurricane clips which secure your roof to your house.
  • Ensure your house and extensions are properly designed and built to withstand hurricanes.

For Flood:

  • Avoid buying or renting in low lying areas.
  • Have an alternative route to reach home in the event of a flood.
  • Always keep non-perishable food items for emergencies, e.g. canned foods, crackers/biscuits.
  • Make alternative plans to pick up children in the event of an emergency.
  • 9. Can I insure retaining walls under my house policy?

Most polices only covers retaining walls if the house depends directly on them for support. If they are metres away from the house, they are not insured by the policy and their value should be excluded from the sum insured proposed.

10.  If my retaining wall falls down, can I recover under my policy?

Not in all circumstances. Your policy covers Collapse following Subsidence and Landslip. Retaining walls often fall down because their foundations were inadequate, or because insufficient holes were provided in them for water to drain from the earth behind them; the sheer weight of water after heavy rains pushes the wall down. Insurers do not intend to pay for such damage.

11.  I am thinking of renovating my house. What should I do with regard to insurance?

With regard to cover for your property, tell us how much renovation you are going to do, and how long it is anticipated to take. Your normal private dwelling house policy assumes that just normal living will be happening at the residence, including painting and decorating. We may find it necessary to alter some of the terms of your insurance for the duration of the work.

With regard to your potential liability for injuries to workmen (the Workmen’s Compensation Act, Chap 88:01 of the Laws of Trinidad and Tobago gives an injured workman the right to sue you even though you do not employ him directly and do not supervise his work) you should give us an estimate of the wage roll of the workmen or the contract price, from which an estimation of the wage roll will be made in order to calculate a premium for Employer’s Liability insurance.

It is always better to have a written contract for the work to be done, and the TTSA (T&T Society of Architects) standard conditions of contract contain clauses specifically designed to protect you, whether the work is a renovation or construction of a completely new building; insurance is required to be effected with an insurer approved by you, the Principal, against both damage to the building and injury to workmen and Third Parties (passers-by, visitors to the site, etc). See Contract Works insurance under Glossary.