Keep a close eye on inflation when finalizing your property insurance

September 12, 2022

BRIDGETOWN, Barbados – The cost of constructing a property today, is far greater than that seen 10, 15, or 20 years ago, which is why Sagicor General Insurance (SGI) continues to encourage Barbadians to ensure they take increased building costs into consideration when determining the amount to insure their property for.

This was the advice shared by Donelle Belgrave-Young, Assistant Manager – Insurance Operations here in Barbados, during the company’s “Let’s Talk!” online panel discussion, held under the theme “Disasters are real, get real advice”, which took place on Thursday, September 1.

“We are very cognizant of the fact that individuals insure according to their pockets, however, what we seek to impress upon our clients at all times, is the need to concern themselves with what it would cost them today to rebuild or repair their structure after experiencing a hurricane, flood, earthquake, or some other unforeseen peril”, she stated. “We always ask them not to think about what they paid when it was first constructed or bought, but rather, to factor in today’s pricing of materials, labour and other variables that would have an impact on the cost to replace or repair the original elements.”

When asked if there was a formula that individuals can use to calculate these increased costs, Belgrave-Young stated there are numerous formulas that could be employed, however the most accurate and best way to gauge these adjustments is by using the rate of inflation.

“When we think about what’s happening today, we know the logistical challenges that surround the shipment of building supplies and the impact that demand and supply has on costs, resulting in the prices of these materials being inflated by 25-50 per cent in some cases”, stated the insurance professional. “So, mathematically speaking there are formulas we can look at, but if we really wish to be practical, we must take inflation into account to get a realistic estimate of construction costs today.”

At the start of this year’s hurricane season, SGI’s Vice President – Insurance Operations, Mark Prescott, pointed to the fact that over the course of a few months this year alone, global logistics and supply chain issues drove up building costs quite significantly, which if not accounted for when renewing or taking out property insurance, can leave policyholders at a disadvantage. “If a property is insured for Bds$300,000.00, but the actual cost to replace it based on the current rebuilding costs is Bds$350,000.00, then one can see where a property owner would lose out if they had to suffer the unfortunate experience of losing their home to a storm or hurricane.”

For more information and to get the best coverage for their property and valued possessions, Prescott urged individuals to reach out to the company’s team of knowledgeable representatives using one of many options, such as dialing 431-2800, sending a WhatsApp message to 467-7243, emailing [email protected], or connecting via SGI’s Instagram and Facebook pages.