Tropical storms, hurricanes and earthquakes can cause extensive damage to property, as recent events worldwide have shown us. Depending on where you own property in Mexico, you may be at risk for one or more of these potential catastrophic events, so it is important to make sure that you are covered by your insurance policy. We asked Antonio Trejo, an insurance broker with Guardian Insurance, about what you should know in order to protect yourself.
My home in Mexico has basic insurance coverage. Am I covered in the event of an earthquake or hurricane?
Antonio: No. The basic coverage of insurance companies in Mexico do not include things like earthquakes, volcanic eruptions, or hurricanes. But it’s also important to keep in mind that the hurricane coverage is not for just hurricanes. It includes severe weather such a tropical storms. Some people don’t know and find it out when it’s too late to receive coverage by their insurance company.
What if I own an apartment or a condominium unit and the building is insured for earthquakes/hurricanes? What does that cover? Is my unit covered?
Your unit would be covered by the building’s insurance, but only to build the unit without any betterments or improvements. The contents, on the other hand, would not be covered at all. You need to have your own individual insurance policy to protect that part of your investment.
I have valuable items in my unit that were imported into the country, adding lots of costs due to shipping and customs. Does the coverage take that into account?
Yes, when you contract Insurance for your contents, make sure your agent issues the policy with replacement value coverage. That does not have extra cost and it makes a huge difference. If you need coverage in the event of a loss, the insurance company will replace your item without considering any depreciation, including the costs of importing the item from another country if that was the case, and the shipping costs.
What if I install additional protections, such as storm shutters? What effect does it have on my premiums?
A lot of people don’t know this, but having your property on high land (well above the level of the ocean) or having hurricane shutters can grant a big discount on things like hurricane coverage.
What if I own beachfront property? How does insurance take that into account regarding pricing and risk?
Insurance companies in Mexico divide property risks in two: all those properties that are more than 500 meters from the ocean, and all those that are less. Because the risk is higher when you are less than 500 meters from the ocean, that increases the premium drastically.
It’s also important that people declare the right distance to the insurance company. The inaccurate information provided in the policy can result in denial of a claim and cancellation of policy.
What other things can help reduce my insurance premiums, beyond location or sea level height? How can I negotiate a better deal?
Yes, in addition to what I mentioned in question 4, if your property is solid structure, has security cameras, fire extinguishers, and security bars can also help reduce the premium in certain coverages.
Are hurricanes and tropical storms covered differently? Are they same category? What about earthquakes? What category does this fall into?
Hurricanes and tropical storms both fall into the hydro meteorological coverage, better known as “severe weather and hurricane” and they cannot go one without the other. Earthquake coverage falls into the category of “Earthquake and Volcanic Eruption”, and they cannot go one without the other.