RE: Inflationary Increase in Property Values
As you are aware, the cost of building materials has increased over the past twelve (12) months. This has resulted in an increase in the cost of construction of new structures, and most importantly, has increased the values of existing structures. It is estimated that the average cost of constructing a home in Antigua is now between EC$350.00 – EC$400.00 per square foot, up from EC$275.00 – EC$300.00 a year ago, and the upward trend is continuing.
Section 176 of the Insurance Act of 2007 states that the penalty for underinsurance cannot apply for claims under a Homeowners Insurance Policy where the insured value at the time of the loss is not less than 85% of the replacement value, however in many cases, the current values are inadequate to avoid the underinsurance penalty (also called average condition).
With the forecast of an above average hurricane season, should a wind event make landfall in Antigua & Barbuda, the likelihood is that this would cause a shortage of building materials, resulting in further increases in prices overall.
This letter is part of Brysons Insurance Agency’s public education program designed to alert you, our valued policyholders, our partners, and the public of the consequences of underinsurance.
Please let us know how we can be of assistance in your understanding of this issue.
Brysons Insurance Agency