Otis: The importance of a well-structured Home Insurance Policy

Hurricane Otis, which struck Acapulco last year, has left a significant mark on the city and its residents. Insurance companies have estimated payouts of around $2 billion, though the total loss in Acapulco is somewhere around $16 billion.

Insurance Industry Response

In a recent press conference, Norma Alicia Rosas, General Director of AMIS, discussed the key role of Mexican Insurance Companies in addressing the damage caused by Otis. This event is now officially the third most expensive claim in the history of Mexico’s insurance sector.

Breakdown of Insurance Claims

Property Insurance: The majority of payouts will go towards Homeowners & HOA Insurance (Hotels, Buildings, etc.,) covering over 7,000 insured properties.
Auto Insurance: In second place it’s auto insurance, with more than 9,000 vehicles under total loss.
Other Assets: Boats and other unspecified properties also account for a significant portion of claims.

Coverage Gaps and Challenges

While insurance companies were crucial for those with a policy, companies will only cover about 18% of the total damage in Acapulco. This is because many properties in Acapulco either lacked insurance or did not have the right type of policy: one with Hurricane coverage.

A one-of-a-kind event in decades

Acapulco had not faced a disaster of this magnitude in over 40 years, which may explain why the need for coverage against hurricanes wasn’t seen as a must.

Preparing for the Future

Climate change has made many areas more susceptible to natural disasters. It is essential to be prepared for the unexpected. Here are some tips:

Emergency Kit: Keep a kit with basic supplies, including food for at least 3 days.
Document Backup: Scan and store important documents electronically.
Adequate Insurance: Ensure your insurance policy covers potential risks in your area.

Rising Demand for Insurance

In 2024, Guardian Insurance MX received more Homeowners insurance requests with Hurricane coverage than any previous year. Clients cite the increasing uncertainty regarding natural disasters as their primary reason for acquiring such coverage.

When to Purchase Hurricane Insurance

Considering that a Homeowners insurance policy typically costs less than 1% of a property’s value, hurricane coverage should ideally be included when the policy is first purchased. While some add this coverage before the hurricane season or after it begins, insurance companies are becoming more strict about offering it during the hurricane season. Some may not offer it at all during this period, potentially leaving thousands without essential protection.

Conclusion

Hurricane Otis demonstrated that natural disasters can strike anywhere, even in historically safe zones.
Homeowners insurance is crucial for protecting your property and peace of mind, especially with the growing impact of climate change.
Hurricane coverage should be included at the outset of your policy to avoid potential coverage issues later.

Review your insurance policy and ensure it provides adequate coverage for potential risks in your area.

Contact your insurance provider for more information and to update your coverage as needed.

Request a customized Home Insurance quote.