San José, Costa Rica, since 1956

Insure Home, Possessions against Disasters, Theft

IF you want toinsure your houseand/or its contents,there are severalways you can dothis. You can alsohave a liability policy,in case someonesues you for anaccident occurringin your abode.“ H O G A RSEGURO 2000”Home Fire &Natural Disasterpolicy. This is forhomes and/or their contents. It can only beused for single dwellings, not commercialbuildings or apartments. If the house is rented,the tenant covers his household effectsand the landlord insures the house itself.Within this policy, there are four subcoverages:“A” covers fire and lightning;“B” covers damage caused by mutiny,strikes, vandalism, hurricane, cyclone,explosion, smoke, falling objects, vehiclesand resulting fire; “C” pays for damagecaused by floods and landslides; “D” coversnatural disasters: earthquakes, tremors,volcanoes, tsunamis, etc. C and are D soldjointly. You can take A coverage by itself,A+B, A+CD or complete coverage withA+B+CD.The premium is based on the value ofwhat is being insured and it is up to you, theapplicant, to come up with reasonable values.For the house, base it on depreciatednew value (i.e. estimated cost of rebuilding),less 1% depreciation for every yearthat the house is old. For the contents, useactual cash value (depreciated value) –what you would get at a garage sale. INSdoes not ask for a comprehensive list, butyou should itemize single articles worth$750 or moreCoverage A costs 0.0672% of the value.A+B costs 0.0896%. A+CD costs 0.2212%.Complete coverage A+B+CD costs0.2436%. In addition, premiums are taxed13%.DEDUCTIBLES. On B coverage thedeductible is ¢20,000 per claim. For hurricanedamage it is 20% with a minimum of¢20,000 For C+D coverage the deductible is1% of the total insured amount with a minimumof ¢50,000. As is usual with INS policies,these deductibles are fixed, standard:no variations are possible.INS has sold the Hogar Seguro 2000 policysince 1988. It is a good policy for majordisasters (don’t claim for cigarette burns onyour living room carpet!).In the aftermath of the bad earthquakesof 1990 and 1991 INS responded fairly andefficiently in paying claims.A recommendation: If you live in a noncombustiblehouse (like most houses nowadays)don’t insure the contents, which wouldhardly be affected in an earthquake – whichis probably your major concern. If you livein a combustible house – yes, you shouldinsure the contents.HOME theft insurance. This coversitems stolen from within the house, in verifiablesituations of breaking and entering –providing items appear on a list.You must list everything within thehouse – not just high-risk items like TVs andstereos. But you can’t insure jewelry, gems,precious metals, furs, cosmetics, cash,portable electronics, cameras, firearms,motor vehicles, animals, documents or securities.INS specifies that they will only providetheft insurance if the house is of“solid” construction, with double or deadboltlocks on outside doors and with bars onthe windows.Your list should include actual cash valuesin colones for all items, approximatedates of acquisition and full descriptions ofelectrical items, cameras, mowers, bikes andmore (including makes, models and serialnumbers).For claims, advise INS immediately at800-800-3030. A police report with a list ofstolen items is mandatory, with copy forINS. Paperwork is considerable and settlementsusually take 60 days or more. Thedeductible is 10% of value of stolen items,minimum ¢50,000 per break in.Damage to the home caused by thievesbreaking and entering is paid up to 5% of thetotal insured value and based on tradesmen’sbills for repairs.The premium rate depends on the securityand location of the home – there are discountsfor good security and surcharges forremote locations. Average rate is 1.4% peryear of total on list, including 13% sales tax.RECOMMENDATIONS. It usuallytakes 2-3 weeks to get theft insurance inplace, so don’t apply on the eve of yourdeparture on a world cruise. This policy isextremely hard to claim against – there arelots of conditions, the most notorious ofwhich says: “If the building is to be unoccupiedor its usual dwellers absent for a periodof more than 48 hours, the insured mustplace it in the care of a guard. For periodsgreater than one month, in addition to hiringa guard, the insured must inform INS inwriting at least one week before the absenceis to commence….”Installing a home alarm system sometimesmakes sense!HOMEOWNERS’ liability insurance.INS’s “Responsabilidad Civil General” policypays awards granted by the court stemmingfrom lawsuits due to accidents occurringin the premises of the insured or duringan insured activity. Policy also covers legalcosts if the court rules that they should bepaid by the insured.Anyone can get insurance – homeowners,tour operators, hotels, restaurants, shopsor food manufacturers. The policy is basedon a certain activity or premises, and if it isforeseen that an accident may occur to aguest, consumer or client, a liability policymay be advisable. Two coverages are available:Coverage A – Injury, loss of life and limb.Coverage B – Damage or loss of property.You can have separate limits for coverageA and coverage B, but the usual is acombined limit, where INS will pay up tothe insured limit, per accident, regardless ofthe breakdown of the award. Try to visualizea worst-case scenario of what could happenin an accident – that is the recommendedlimit. Take into account, however, that inCosta Rica awards have not got out of hand,as in other countries, in regard to punitivedamages, pain and suffering or deep pockets.The premium is a percentage of the insured amount. For homeowners, it is usually about 1%per year. The exact rate is fixed by INS on a case basis, perthe perceived risk as described on the policy application,which has to be filled out by the agent when visiting thepremises. It is usual, also, for INS to send an inspectorbefore establishing the rate, to look at the premises andverify the information on the application.Generally, Costa Rican judges have a healthy attitudetoward liability, assuming every person should exercisereasonable care to avoid accidents. This, coupled with thedisregard of punitive damages, discourages liabilityclaims stemming from trivial accidents. Therefore, notmany homeowners buy liability policies. If a home is tobe rented out, however, a small liability policy may be inorder.“HOGAR seguro comprensivo” Homeowners’ policy.About five years ago, INS started selling this policy,which comprises the home fire and the home theft policies.Without delving deeply, there are several things wrongwith the Homeowners’ policy:1. Only type “A” buildings can be insured (solid walls,in and out). Houses with wooden or combustible walls – inand/or outside – are not eligible. All windows must bebarred.2. All direct damage coverages (ABCD on the homefire policy) are automatically included. You can’t get protectiononly against fire and lightning.3. The contents must be insured for theft, a coveragewhich most people eschew as it’s very hard to get claimspaid.4. The contents must be insured against natural disasters.People rarely insure contents, as earthquakes (mostpeople’s main fear) rarely damage them.5. You must make – and keep updated – a list on contents.If none of the above disadvantages apply, a homeowners’policy will save you some premium money. The standardrate is 0.893% applied to the total insured value –which is the sum of the replacement value for the houseand actual cash value for the contents.For more info on insurance, contact David Garrett at233-2455 or e-mail The purposeis to give the reader a better understanding of insurancein Costa Rica. The opinions and viewpoints expressedare those of the writer, and do not necessarily represent theofficial position of the National Insurance Institute (INS).

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