Once you own or drive a vehicle in the BVI, it is mandatory that you have car insurance. There are different types of car insurance but, at the minimum, you will need third party insurance. The types of car insurance include:
- Third party insurance -compulsory if you drive a vehicle in the BVI. It usually covers death and injury to other people if you are at fault for an accident. It may also cover your own legal costs.
- Third party property insurance – usually covers the cost of damage to other people's property (e.g. their car or home) and other related expenses if you are at fault for the accident. It may also cover your own legal costs.
- Third party, fire and theft insurance – in addition to the above this usually covers limited damage to your own car caused by theft or fire.
- Comprehensive insurance – in addition to the above this usually covers the cost of damage to your own car even if you were at fault for the accident.
Insurance premiums will vary based on the level of risk the insurer is covering. For example, the more expensive your car is to buy, maintain and repair, the more expensive the insurance is likely to be. Some insurers will only allow you to purchase third party insurance for older, lower-value cars. Similarly, the experience of a driver will be considered by the insurer. A statically higher proportion of young drivers are involved in accidents than older drivers so most insurance companies charge a higher premium for drivers under 25 and for people that have only recently passed their driving test.
Home or Homeowners Insurance
Your home is a valuable investment and you should want to make sure that you have the best insurance coverage to protect your home and its contents. Remember to always shop around for the right level of cover at the best price.
Types of homeowners insurance policies
Currently, there are seven standardized homeowners insurance forms in general use, of which those listed below are the usual forms used in the British Virgin Islands.
The actual form of policy and sum insured needs to be calculated to take into account:
- the kind of relationship that you have to the property, for example:
a. Is it a stand-alone, single family residence or part of a block?
b. Are you the owner or renter?
c. Are there outstanding loans against the property?
- the cost of rebuilding or repairing the property;
- the cost of removing debris and clearing the site, if needed;
- the value of the contents and if the contents are to be covered for
a. stated value” – this is the value agreed at the outset of the policy;
b. replacement cost cover” – this is the value to replace the item today, even if it were old, this is the most expensive choice;
c. actual cash value”, which is replacement cost value with depreciation due to wear and tear taken into account - this is likely to be the least expensive choice.
The standard forms include:
HO2 – Broad Form Homeowner Policy - A form that provides coverage on a home against 17 listed perils (a peril is something that could happen to cause a claim such as a fire). Contents are generally included in this type of coverage, each of them has to be specifically listed and valued on the form.
The perils covered include fire or lightning, windstorm or hail, vandalism or malicious mischief, theft, damage from vehicles and aircraft, explosion riot or civil commotion, glass breakage, smoke, volcanic eruption, and personal liability.
Exceptions include floods, earthquakes (an exception is a peril that is NOT normally included in the cover, unless it is requested, evaluated and included on the policy, usually at extra cost, if it can be offered).
HO3 – Special Form Homeowner Policy – This is the typical, most comprehensive form used for single-family homes. The policy provides "all risk" coverage on the home but some perils are excluded, such as earthquake and flood. Contents are covered on a named peril basis – this means that the buyer will have to specify what perils are to be covered, such as accidental damage, fire and so on.
HO4 – Renter's Insurance – This is the "Tenants" form is for renters. It has been prepared to take into account the needs of the tenant and the liabilities of the tenant to others.
HO6 – Condominium Policy - The form for condominium owners.
Classes of coverage
For each policy, there are typically five classifications of coverage. These are based on standard American Association of Insurance Services or American Association of Insurance Services forms.
Coverage A – Dwelling
Covers the value of the dwelling itself (not including the land). Typically, a coinsurance clause states that as long as the dwelling is insured to 80% of actual value, losses will be adjusted at replacement cost, up to the policy limits. This is in place to give a buffer against inflation. HO-4 (renter's insurance) typically has no Coverage A, although it has additional coverages for improvements.
Coverage B – Other Structures
Covers other structure around the property which are not used for business, except as a private garage. Typically limited at 10% to 20% of the Coverage A, with additional amounts available by endorsement.
Coverage C – Personal Property
Covers personal property, with limits for the theft and loss of particular classes of items (e.g., $200 for money, banknotes, bullion, coins, medals, etc.). Typically 50 to 70% of coverage A is required for contents, which means that consumers may pay for much more insurance than necessary. This has led to some calls for more choice.
Coverage D – Loss of Use/Additional Living Expenses
Covers expenses associated with additional living expenses (i.e. rental expenses) and fair rental value, if part of the residence was rented, however only the rental income for the actual rent of the space not services provided such as utilities.
Covers a variety of expenses that can include debris removal, reasonable repairs, damage to trees and shrubs for certain named perils (excluding the most common causes of damage, wind and ice), removal of property, credit card / identity theft charges, loss assessment, collapse, and landlord's furnishing, these may vary depending upon the form.
In an open perils policy, specific exclusions will be stated in this section. These generally include earth movement, water damage, power failure, neglect, war, nuclear hazard, intentional loss, and concurrent causation (for HO-3).
Life insurance has been traditionally called life assurance; this was because the term of the contract was for the lifetime of the insured person, so, as everyone dies eventually, you were assured of a payment. With other insurance you can only claim if you suffer the agreed event during the policy term. When term life insurance was introduced where there was a set period for the policy, the name life insurance became more popular. You will still see assurance and insurance used interchangeably.
There are two basic types of life insurance:
- Term life insurance - term life insurance in its simplest form is life insurance coverage for a set period of time, the term. Your beneficiaries are paid a death benefit only if you die during the term. Keep in mind that term life insurance does not usually build up a cash value, but at the same time, it typically offers lower premiums in the early years of the life insurance policy.
- Permanent life insurance - permanent life insurance comes in different types including universal life insurance, variable universal life insurance, and whole of life insurance. As you are buying protection for the rest of your life, there will be a payment from the insurer at some stage so the premiums are higher than a term life policy which is based on the risk of you dying during the (shorter) policy period, and permanent life insurance can include a savings programme as well as a death benefit. Permanent life insurance policies offer long-term financial protection to provide for your dependents upon your death.
Health insurance is a protection against the risk of incurring medical expenses.
Many people end up in bankruptcy or financial ruin because of an illness. Health care is very expensive and even when people take precautions and buy insurance, illness can still leave them with a big hole in their wallets. If you get sick or need medical treatment, the last thing you need to worry about is how you are going to pay your bills.
Many employers in the BVI buy group health insurance from a specific provider for their employees. Employers contribute a portion of the premium and the remainder is deducted from your salary. If you sign up with your employer’s health insurance plan, you will get your insurance policy at a group rate which is usually lower than you would pay as an individual. Some employers also offer plans that cover your family, spouse and children but these can be at an additional cost.
If your employer does not provide health insurance, you may want to look for one for yourself and your family. Look for a policy that includes the health and medical services you want. Most insurers provide different policies for people at different stages of life. The premium and deductible will also vary depending on your age and health. Try to get as much information as possible from each potential insurer and compare their various offerings.
As with all insurance, always look out for the deductibles and co-pay when comparing health insurance. A copayment, or “co-pay,” is a flat dollar amount or percentage of cost that you pay as an out-of-pocket expense for a medical service, such as a doctor or dentist visit and prescription drugs, before the insurer pays the remaining costs. Health insurance often excludes coverage that relates to pre-existing conditions and other specified items; you must ensure you know what they are. There may also be restrictions about how much you can claim and if waiting periods apply for specific types of claims which may include obstetrics and major dental work.
Before signing up with your employer’s plan, you should also ask detailed questions about what it does or doesn’t cover to ensure it is the right plan for you. If your spouse’s employer offers an insurance plan, you may want to compare to see which one provides better coverage for your family. Remember, in the BVI children enrolled in school (elementary and primary) and seniors (age 65 and older) are entitled to free health care from public health care facilities.
Key points to consider:
- Insurers will REQUIRE you to provide information on your medical history and sometimes on your family’s medical history, so that they can ensure that they charge the correct premium for the risk they are covering. If you fail to mention illnesses, diseases, conditions or injuries, the company may be able to refuse a claim that relates to your previous condition. They may exclude claims for these pre-existing conditions anyway, but you would be aware of that before you went for treatment, and know that you would have to fund the payment some other way.
- It is important to know if your insurer will pay for overseas treatment. It may be that there are regions that you have to get prior permission to go for treatment or your insurer may not pick up the cost. If your insurance is only accepted in the BVI and not in the United States Virgin Islands, Puerto Rico or the U.S. mainland, it may not be the best option for you as you may have a medical need that requires you or your family to seek treatment outside the BVI. It may also be a good idea to get insurance for air ambulance services in case you or family face a medical emergency that requires you to be airlifted outside of the BVI. Find the policy that best meets your needs and your potential health risks.
Other types of insurance
We have listed the main types of insurance that most people could need, but there are many others that are available, including:
- Travel insurance – this can cover expenses incurred if you cannot take a trip that you have already paid for, and it can cover unexpected losses incurred whilst away on a trip. It can include medical cover in the region you are visiting.
- Credit insurance or loan indemnity insurance – can assist with paying for loans or mortgages if you become unable to pay for them.
- Pet insurance – this is best understood as a “health and life” insurance for your pets covering some veterinarian fees, medications, or compensation if a pedigreed pet dies. It can also cover the theft of a pet.
- Annuities – can be purchased with a lump sum or regular investment to provide an amount, or regular payments at some stage in the future, say for school fees for a child or grandchild or at retirement.