NAGICO Chairman Speaks

Daily Herald Article

Very informative article. Glad they went into such depth.

The reduction in coverage based on the amount of claim paid must be unique to the Islands......that certainly is not the case in North America. Maybe it is a European way of providing insurance.

This is common in the US. If the replacement cost of your home is $500,000 and you only insure it for $300,000, your claim will be reduced proportionately. Insurance companies want premiums for the full replacement cost of your home. Read your policies carefully.

Most policies require minimum coverage of 80% to qualify for full replacement cost claims.

I understand that, this is not what he is talking about. He is referencing that if you had your home insured for $500,000 and had a $200,000 fire and a claim paid out for $200,000, after the claim your policy is now only worth $300,000 and you have to purchase the additional $200,000 again for the remainder of the term of the policy (they call this the reinstatement premium) . In actual fact what you are talking about is more less called co-insurance. On most home insurance policy the insurer warrants that you insure to 100%, on most commercial occupancies the co-insurance factor might be 80% or more likely 90% of the full rebuilding value...... the lower the requirement the higher the rate per $100 of insurance.