Insurance on Wood Frame Homes in the VI

And the non-wood frame owners are facing significant premium increases or possibly even no bid as well

Curious to know what kind of hikes you guys are seeing in your premiums.   I would imagine this is going to almost haunt sales of wooden homes unless they were going to be torn down anyhow.   

I've not seen any hard details or facts yet. But, on the surface it sounds catastrophic, for anyone trying to sell a wood frame house. Mine is concrete on the bottom and wood frame on the top...maybe 50/50. I wonder how that would be interpreted?

I’ve been hearing similar things for the past few months.  I don’t think this is confined to the USVI, I’ve heard Florida has seen homeowner rates skyrocket.  I also know the insurance on our condo structure, just north of Boston, has more than tripled since last year (on an 11 story building across the road from the beach).  Many of the residents/owners in the building are freaking out because this increases their monthly HOA fee, a good percentage are retired so living on a fixed income  

We self-insure for windstorm on STX but just the regular insurance (fire, theft and liability) is close to 2X what we pay on our home on Martha’s Vineyard (that includes windstorm) and that home is probably 2X the value of our St. Croix property.  Bottomline, property insurance costs have gone completely irrational in the last couple of years, which has to have a negative impact on the housing market and it will increase rental costs as well.  If it keeps going like this I will drop everything but liability.

@ vicanuck -- wood frame walls or just roof beams -- wood above?

@exit-zero its a two-story home. The concrete structure goes from the ground to approx. 2/3 of the distance to the eaves. So, its mostly poured concrete.

We're currently looking to purchase a home in the USVI. Our agent told us not to look at wood frame homes because we won't be able to get insurance. We found an 1100-masonry home, and the insurance quote we received was $22k.

Posted by: @crg6

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We're currently looking to purchase a home in the USVI. Our agent told us not to look at wood frame homes because we won't be able to get insurance. We found an 1100-masonry home, and the insurance quote we received was $22k.

When we closed on our home in January 2019 the insurance quote was $26K with windstorm coverage and $6K without windstorm on the policy.  We’ve chosen to self insure for two basic reasons.  First, all structures on the property are concrete construction, roofs are however wood.  Second, everything, except the garage we just had built, was constructed in about 1968 and therefore has survived a good number of powerful storms without catastrophic damage.  Our new garage is also a bunker, watching it being built was an education, it’s impressive how things are constructed using concrete.  As we don’t have a mortgage on the property we have the option of not selecting windstorm coverage.  I’m confident we could add that additional coverage at some point in the future if we change our thinking but so far we’ve saved roughly $100K and rates have steadily crept up. 

@jaldeborgh Self insure? Does that mean putting would be premiums into a self managed "Emergency Fund"?

@vicanuck it would be for actual completely stick framed structures as in babylon construction-- the mass majority have wooden rafters and that would affect pretty much everyone here if that was part of it

Posted by: @reelnut

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@jaldeborgh Self insure? Does that mean putting would be premiums into a self managed "Emergency Fund"?

Essentially, yes.  I’m retired and we have a “nest egg” that is professionally managed.  Since buying our place we’ve not taken roughly $100K from that savings, so that money has undoubtedly grown, in addition to not having spent it on insurance.  Self insuring is definitely not for everyone as there are obviously risks involved.  We’ve made significant improvements to the property that should make it more robust for all but the most catastrophic of storms.  I also believe I can absorb any worst case downside financial risk so it’s a bet I’m willing to make.  If my feelings change over time I’m confident I can add windstorm coverage. We live at just over 200 feet above sea level and are nestled into the side of a hill (so very protected to northwest), if we were on the water, in a potential flood zone or exposed on top of a bluff I’d very likely think differently.  Ultimately it’s a risk-reward decision.

Posted by: @reelnut

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@jaldeborgh Self insure? Does that mean putting would be premiums into a self managed "Emergency Fund"?

"Self Insured" means having no insurance.  Some self insurers do put "would be premiums" into some type of savings or investment account, others simply take the risk and spend the money rather than save or invest.  If you have the financial means to pay for any major repairs or replacement costs of damage to your home from a catastrophic loss and are willing to take that risk (and you own your home free & clear) then by all means consider self insuring.  FYI - If you have a mortgage on your property, self insurance is not an options.  Your lender will require that you have insurance. If you do not have the financial means to cover major losses to the property self insuring is probably not a good idea.

When we first built our 5,500 sq. ft. Caribbean home (in 2001) the annual premium was around $13,000 and it had a $25,000 deductible for storm damage. Since the home was constructed of reinforced concrete and we were financially secure, after 2 years we decided to self-insure.  In that time we never had any type of loss.  You can do the math to figure out how much we've saved.

Question for people who self insure. How do you protect yourself from potential liability claims?

Posted by: @stcmike

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Question for people who self insure. How do you protect yourself from potential liability claims?

there are different types of homeowners insurance.  For example we still have coverage for everything except windstorm coverage.  So we have liability, fire & theft but are self insured on windstorm.  I’d approach one of the local carriers and see what’s possible.  

I spoke to 7 insurance agencies on island this week about insuring the 1000sq ft masonry house we're attempting to purchase (shutters on the whole house and a new roof)- none of them will offer any wind policy.

The purchase will be falling through next month if we can't get an insurance quote. I really don't see any options here. You can't "self insure" and get a mortgage.

Island Living,

Not sure how much things have changed in the last 10 months but I got a quote from Marshall & Sterling back last November. It was for the same size house (completely renovated after Maria) but all wood frame construction. The quote was for $10.5K / yr and had a 3% (of insured value) deductible for windstorm damage. Since we don't have a mortgage we opted out of getting that coverage. Mostly after hearing all the horror stories of folks that DID have windstorm insurance and got screwed over after Maria. We covered the cost of the renovation - Maria just took care of a lot of the demo! After the reno (5 years ago) we were NOT able to get a quote for windstorm coverage. So it seems to go back and forth depending on the situation?

Good Luck!

Mike  

No luck. As mentioned this is poured concrete, full shutters, new roof. Looks like it's going to fall through as there is no one offering windstorm coverage. Frustrating to live here a decade and not be able to purchase a home without $400,000+ cash on hand.

Marshall & Sterling - "unable to write HO policy with windstorm coverage"

Inter-Ocean - "we cannot accommodate this risk at the moment"

Masters - declined

Caribbean Risk Group - "no windstorm capacity"

Guardian - declined

etc

I had a very in-depth discussion with a senior insurance executive on-island recently. Apparently, this has happened at least twice before in the past 20 or so years.

Its really push back from the big global re-insurers which trickles down to homeowners and is no different from what's currently happening in Florida and California among other parts of the world.

I was told that this too "de-risking" will eventually abate as it has in the past. It might take a year or two before they loosen up and begin to take more risk.

He did say that approx. 50% of homes in the VI sell for cash.

Posted by: @vicanuck

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I had a very in-depth discussion with a senior insurance executive on-island recently. Apparently, this has happened at least twice before in the past 20 or so years.

You think?  https://stcroixsource.com/2001/05/24/how-get-through-home-insurance-crisis/

https://stcroixsource.com/2001/07/10/more-insurers-needed-territory/

I hope history repeats itself.

Our rates jacked way up in the early 2000s and slowly came back down to earth in 2010.

Now up %30 this year (the low bid), no bid from M&S. 

@Scubadoo 

If you just changed the date from 2001 to 2023 and changed the names of the hurricanes these articles could have been written a few months ago.

Deja vu all over again!