The Atlantic hurricane season runs from June 1 to November 30. The best time to review your property policy is before it starts, for a practical reason: once a named storm is heading toward Puerto Rico, insurers usually suspend policy changes and new policies. Whatever you have not adjusted by then usually can no longer be adjusted.
These are the points we review with our clients every spring.
1. The windstorm deductible is not your usual deductible
In most homeowners policies in Puerto Rico, hurricane or windstorm damage has a separate deductible, expressed as a percentage of the dwelling limit rather than a fixed amount. A 2% deductible on a home insured for $250,000 means you pay the first $5,000 of damage. At 5%, it would be $12,500.
Look for the hurricane or windstorm deductible on your declarations page and do the math with your own limit. If the amount worries you, ask us what options exist and how much the premium changes.
2. The most common mistake: insuring for the wrong value
Many people insure their home for what they paid, for what they think it would sell for, or for the CRIM tax assessment. None of those is the right number. What you need to insure is the cost to rebuild the structure today, at current material and labor prices. Land is not insured, because land is not destroyed.
This matters for two reasons. First, if the limit is too low, it will not cover rebuilding. Second, many policies include a coinsurance clause: if the property is insured for less than a certain percentage of its value (often 80%), the insurer reduces the payment proportionally, even on partial losses.
A simple example: if rebuilding your home costs $300,000 and the policy requires insuring at least 80% ($240,000), but you carry $180,000, you are insured at 75% of what is required. On a $40,000 loss, the payment could be calculated on that 75%, before the deductible. The difference comes out of your pocket.
3. Contents limits
Contents (furniture, clothing, appliances, electronics) usually have their own limit. Check two things: that the amount is realistic for what you own, and whether the policy pays replacement cost or actual cash value (that is, after depreciation). A five-year-old television paid at depreciated value is worth very little.
Jewelry, art, collections and certain equipment often have low sublimits. If you own valuable items, it may make sense to insure them separately.
4. What a property policy usually does not cover
- Flood. Rising water (storm surge, river overflow, runoff) is almost never covered by a homeowners policy. It requires a separate flood policy, which usually has a waiting period before it takes effect.
- Maintenance damage. Leaks from a worn roof or old sealing can be denied as lack of maintenance rather than storm damage.
- Mold and fungus, which usually carry exclusions or very low limits.
5. Additional living expenses
If your home becomes uninhabitable, where will you live while it is repaired? Many policies include additional living expense or loss-of-use coverage. Check whether you have it and what the limit is.
6. Prepare your documentation now
Record a video today walking through every room, opening closets and drawers. Keep a copy of your policy, photos of the property and important receipts in the cloud or outside the house. If you ever need to file a claim, that «before» evidence makes all the difference.
Want us to review your policy?
We are glad to review your property policy with you before the season begins: the windstorm deductible, the rebuilding limit, contents and any gaps. Call us at (787) 754-8090 or request guidance online.
This article is general information. Coverage, deductibles and exclusions depend on the terms of each policy.