Because we are located in the storm belt, the Bahamas is no stranger to hurricanes. (In fact, as we type this, a Category 1 storm is bearing down on us.) As we prepare for the storm’s arrival, we can’t help but remember the devastation that our brothers and sisters in the Northern Bahamas faced last year with Hurricane Dorian, and the fear that they may be experiencing again as another hurricane approaches the archipelago.
As a result of Hurricane Dorian, 17 percent of citizens in The Bahamas were expected to be homeless after the monster storm damaged their homes, highlighting the need of obtaining home insurance. Home insurance is not required in The Bahamas at the moment. In an interview in February 2020, a Bahamas First executive stressed the need of all homeowners having complete catastrophic insurance coverage.
It’s crucial to remember that while some homeowners have insurance on their homes since it’s a requirement for getting a mortgage loan from a bank, it doesn’t always cover you as a homeowner. (Source: The Nassau Guardian.) According to a January 2020 news story, many homeowners were unable to obtain their insurance reimbursements following Hurricane Dorian because the funds were diverted to banks for debt arrears. Gowon Bowe, a former chairman of the Bahamas Institute of Chartered Accountants, stated in this report that it is critical to keep up with mortgage payments in order to avoid the bank becoming the owner of the house and obtaining the insurance payout.
This article aims to provide you with an overview of various insurance policies and provisions to help you ensure that your home and belongings are sufficiently secured.
Can you insure a home in The Bahamas?
Home insurance in The Bahamas can vary in coverage, with some policies covering only the structure and others covering both the structure and its contents. Some policies may additionally include liability insurance, with amounts ranging from $250,000 to $1 million in The Bahamas.
How much does it cost to insure a house in The Bahamas?
Aside from the year-round tropical environment, magnificent natural beauty, and laid-back Bahamas lifestyle, the islands also provide the following advantages:
According to the Bahamas Real Estate Guide, the Hotel Development Act may waive the annual tax costs on your February Point home or condo.
For more information, contact your tax advisor.
A: You will receive a fee simple title, which implies that you will become the freeholder of the property after paying the charges and fees.
A: This is a traditional British way of formalizing a receipt. Stamp Duty in the Bahamas ranges from 8% to 12% of the property’s worth, and the amount is split evenly between the seller and the buyer. (At February Point, the buyer’s portion of the Stamp Duty cost is included in the all-inclusive rate.)
A: Budget for annual costs of around 1% of the home’s replacement value (excluding land) plus all items insured.
Is hurricane insurance the same as flood insurance?
Yes, you could be affected by flooding, storm damage, or hurricane damage (since you’re reading this, you already know this): It’s all over the news… A homeowner discovers that their homeowner’s insurance does not cover damage caused by hurricanes and floods.
What’s the Difference Between Homeowners, Hurricane, and Flood Insurance? Flood insurance usually covers water that enters your home from somewhere other than your property. Hurricane insurance covers wind damage only, not floods, caused by a storm with winds above 74 mph, i.e. a hurricane. Wind damage will most likely be covered by your homes’ insurance until winds decrease below 74 mph, i.e., a tropical storm or less. In most cases, your property insurance will cover wind and water damage caused by other events.
Hawai’i And Flood Insurance:Flood insurance protects you in the event of a flood, such as when a stream overflows or when heavy rain falls on Hawaii’s mountains and the water pours down the slope and into your property. Typically, it is not covered under homeowners or hurricane insurance. Many people believe they don’t need flood insurance because they aren’t in a flood zone and their vendor doesn’t demand it. However, as the flood insurance program states, most flooding occurs outside of a flood zone, so consumers should view it as supplemental coverage and get it.
There Is A Waiting Period Before Insurance Takes Effect: Imagine you’re watching the local news and a large hurricane has just changed course and is headed straight for your house. So you call your insurance agent and place an order for hurricane insurance. Most insurance policies include a 30-day waiting period between the time you purchase and the time coverage begins.
Is Flood Insurance Necessary? If you live in a potentially affected area, which could include anything from a home on the coast near a vulnerable levee that sees frequent floods to one downhill from a stream that hasn’t flooded in years, you should consider purchasing a separate flood insurance policy to cover your home and its contents.
Floods Occur Outside Flood Zones: According to FEMA, areas with low-to-moderate flood risk account for over 25% of all flood insurance claims. You’ll be eligible for a preferred-risk policy, which is great news. The annual rates for this type of protection begin at around $150. (for both property and contents).
Is your Hawai’i property at risk of flooding? The Hawai’i Flood Hazard Assessment Tool will show you where flood threats occur near you if you enter your exact address anywhere in Hawaii. To see if your home or business is in a flood-prone location, use our Hawaii Flood Insurance Map tool.
Even the most comprehensive homeowner’s insurance, however, will not cover all types of hurricane damage. If you reside in hurricane-prone terrain, knowing what your homeowners’ policy covers and what it doesn’t is crucial to getting the best storm insurance.
Storms With A One-two Punch: Hurricanes cause two major issues: water and wind. In order to cover hurricane damage, you may need to purchase these distinct policies, depending on where you live:
Flood insurance: Floods, especially water from a storm surge, are not covered by any homeowner’s insurance policy. You’ll need flood insurance to be covered.
Hurricane/Windstorm insurance: In some hurricane-prone states, homeowners insurance policies do not cover windstorm damage. If you live in one of these states and want coverage, you’ll need to purchase a separate windstorm policy.
What Does Hurricane Insurance Cost? The cost of hurricane or windstorm insurance is determined by the amount of your deductible, your location, and the cost of rebuilding your home.
What Does Flood Insurance Cost?
The cost of flood insurance is also determined by where you reside and the deductible you select. According to the National Flood Insurance Program, a $100,000 flood insurance coverage costs roughly $400 per year.
Tips for Getting Hurricane Insurance: Make sure you have enough coverage to cover the full cost of reconstructing your property, whether you’re buying homeowners insurance, flood insurance, or windstorm insurance – or all three. Your insurance agent can assist you in determining the appropriate amount.
Comparing Homeowners’ Insurance Deductibles to Hurricane Insurance Deductibles: Home insurance deductibles are normally a fixed financial sum, such as $1,000, but hurricane/windstorm deductibles are usually a percentage of the insured value of your home. They normally range from 1% to 5%, though in high-risk coastal areas, they can be greater. If your home is insured for $500,000 and you have a 5% wind deductible, your payment will be decreased by $25,000 if you file a claim.
The federal National Flood Insurance Program provides flood insurance in the United States, although it can also be acquired through brokers or companies.
While flooding is prevalent during hurricanes, hurricane insurance does not cover most flood damage. Flood insurance kicks in when water seeps or rushes into a home or structure during a storm. Flood insurance is required by mortgage lenders for homes in flood zones.
Even if you are not in a flood plain, you may be affected by flooding. For example, if you reside at the bottom of a mountainous slope, a big amount of rain from an accumulation above could pour into your home.
The National Flood Insurance Program (NFIP) is a government-run insurance program Hawaii: The National Flood Insurance Program (NFIP) is a federal program that was created to allow property owners in participating communities to acquire flood insurance protection.
The National Flood Insurance Program (NFIP) is based on an agreement between local communities and the federal government that states that if a community adopts and enforces a floodplain management ordinance to reduce future flood risks to new construction and substantial improvements in Special Flood Hazard Areas, the federal government will provide low-cost flood insurance to the community.
Why Should You Invest in Flood Insurance? There is no home that is fully safe from flooding. Flood insurance might mean the difference between financial recovery and financial ruin. A single inch of water can cause more than $25,000 in damage to a property.
Where to Buy Flood Insurance: The National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Agency, can be purchased through your broker or agent (FEMA). Any homeowner who lives in one of the several NFIP-participating localities can purchase flood insurance (which have agreed to pass and enforce certain stormwater and floodplain management laws).
Flooding May Be Expensive: Flooding can be both emotionally and financially damaging. Without flood insurance, most households are forced to pay for repairs and replacements out of pocket or take out loans. You can recover sooner and more completely with flood insurance. Use the calculator below to estimate the cost of flood damage, even if it’s only a few inches of water.
Purchase Property and Contents Flood Insurance: A flood insurance policy purchased through the National Flood Insurance Program (NFIP) can provide up to $250,000 in property coverage and $100,000 in contents coverage. (Even though they may be part of the same insurance, property and contents coverage must be acquired separately.) You can buy excess flood insurance from private insurers if you desire more coverage. According to the National Flood Insurance Program, the average flood insurance coverage costs roughly $700 per year.
If you acquire a mortgage loan from a federally regulated or insured lender and buy a house in a designated high-risk flood zone, your lender must compel you to carry flood insurance.
- Insurance for personal belongings. Actual cash value (not the most generous amount it refers to the cost of replacing damaged or lost property based on its actual, depreciated value as used goods) is paid by flood insurance.
- Insurance for your home. If you’re insuring a single-family home as your primary residence, you can choose replacement cost coverage (the expense of replacing damaged or lost property with new stuff without regard to depreciation). The maximum coverage available under the NFIP is at least 80% of the entire replacement cost of the building (an amount that is specified in advance for your property).
- Flood insurance is not often covered by homeowner’s or renter’s insurance policies.
- Flood Insurance Fact: Outside of high-risk flood zones, more than 20% of flood claims are filed.
- Fact about flood insurance: Whether or not a Presidential Disaster Declaration is issued, flood insurance can pay out.
- Fact about Flood Insurance: There are two types of disaster assistance: a U.S. Small Business Administration loan, which must be repaid with interest, and a FEMA disaster grant, which averages $5,000 per household. Flood insurance claims, on the other hand, are roughly $30,000 on average and do not have to be returned.
What Flood Insurance Doesn’t Cover: It’s just as vital to understand what flood insurance does and doesn’t cover. Following a devastating disaster like a storm, a good flood insurance policy might be a financial lifesaver. Flood insurance, on the other hand, does not cover everything. Before you buy, you should be aware of the following important flood insurance restrictions and limitations.
- The Flood Water Had to Have Come From Outside: Your flood insurance coverage will not apply if something breaks or malfunctions inside your home, such as pipes freezing and burst or a toilet overflowing, resulting in flooding. Your homeowners’ insurance, on the other hand, should cover these types of losses. Request information from your agent or broker.
- Swimming Pools and Landscaping Aren’t Covered: Your flood insurance coverage will not apply if something goes wrong with a swimming pool on your property, resulting in flood damage to your home. Also, don’t anticipate any compensation for flood damage to your property’s flower beds, vegetable gardens, trees, or other landscaping.
- Small Floods Aren’t Covered: Small floods may not be covered by your insurance company, but they are covered by you. The water that causes damage must have covered at least two acres or impacted at least one additional property to be declared a flood. In addition, if your house suffers from mold or mildew damage that you might have avoided, your policy will not cover it.
- Expenses for living or business interruption are not covered: Any living expenses you may incur will not be covered by your flood insurance coverage (such as renting a hotel room until your property is fixed). You also won’t be reimbursed for any financial losses incurred as a result of business interruption (if you ran a business out of your house) or any other loss of use of your home.
- Money and important documents are not included: Currency, precious metals, stock certificates, and other important papers destroyed in a flood are not covered by your policy. Take images of everything significant to you and store them in a fireproof/floodproof safe.
- The majority of improvements and content in below-ground areas are not covered: Any renovations you’ve made to your basement, such as finished walls or floors, aren’t covered by your flood insurance policy. Furthermore, practically all personal property (including clothing, computers and electronic equipment, kitchen and office supplies, and furniture) in basements or other portions of your home below the lowest elevated floor is not insured.
Insurance companies normally assign an adjuster to inspect your individual house and property damage. Use caution when interacting with him or her. If an independent adjuster, rather than an employee, arrives, inquire as to whether or not this person is authorized to make a claim decision and for what company they work. Keep precise notes on your chats and capture your interactions as soon as possible following any meeting or phone call.
Insurers frequently recommend a recommended contractor for repairs, but you are not obligated to choose them. Be warned that the repair expenses may not cover the entire extent of your losses. This is especially true in places of complete disaster, when contractors can effectively determine their own labor and material pricing. Be mindful of whether construction codes have changed since your property was built and, as a result, the cost of repairs will be significantly higher.
How To File An Insurance Claim: Here’s how to file an insurance claim after a storm or flood, step by step:
Determine Your Flood Damage and File a Claim: Examine your property to see if there is water damage once it has been deemed safe by local authority and the gas and electricity lines have been switched off. If this is the case, call your agent or insurance provider to file a flood insurance claim and request an Advance Payment to assist you in getting back on your feet.
Does homeowners insurance cover flooding from hurricane?
Flood damage is often not covered by private homeowner’s insurance policy. This restriction also applies to flooding caused or exacerbated by a hurricane. To assist cover such damage, you may be able to acquire a separate flood insurance policy via the National Flood Insurance Program.
How much is property tax in Bahamas?
Bahamas Realty Limited is a real estate firm that provides a broad range of services. Vacant land, acreage, single-family homes, condominiums, private islands, resort properties, office/retail buildings, shopping complexes, and warehouses are among the properties we sell.
We are the official Bahamas associate for Luxury Portfolio and a member of Who’s Who in Luxury Real Estate and the Leading Real Estate Companies of the World. On the commercial side, we are the only NAI Global member.
Are brokers and sales advisors in The Bahamas licensed?
Yes. The Bahamas Real Estate Association licenses brokers and sales advisors (BREA). A written test is one of the requirements for licensing. Many BREA members are International Members of NAR and hold numerous NAR accreditations such as GRI, CRS, CRB, CIPS, and CCIM. BREA is an international member of The National Association of Realtors (NAR), and many BREA members are International Members of NAR. A few members belong to the International Federation as well (FIABCI). The public is urged to ask for and use only BREA members’ services.
What are the costs involved in buying or selling property?
VAT (Value Added Tax) on real estate transactions is a graduated tax, unlike regular VAT, which is collected and paid at a rate of 10% on the delivery of goods and services. The rate is 2.5 percent if the consideration is worth less than $100,000. When the consideration is valued at $100,000 or more, the rate is 10%.
*Unless otherwise agreed upon, the tax is usually split equally between the buyer and the seller in the Bahamas.
* For the first time On a dwelling house or unoccupied land purchased for a dwelling house, Bahamian buyers may be free from VAT up to $500,000.
Legal Fees Legal fees typically 2.5 percent of the acquisition price, though this can vary.
Commission on Real Estate – 6% on renovated property, 10% on unoccupied land and companies
What is the Rate of Real Property Tax in The Bahamas?
- 0.625 percent on the portion of the market value that exceeds $250,000 but does not exceed $500,000
- 0.75 percent on the portion of the market value that exceeds $75,000 but does not exceed $500,000
How do I go about getting a mortgage?
Mortgages are available from most major banks and life insurance firms to Bahamians, permanent residents, and international investors. It’s a good idea to call your local bank as soon as you decide to buy a house. Your real estate agent can offer you with a list of service providers.
In what form is title to property given?
The great bulk of real estate is sold as a freehold property. There are a few leasehold property exclusions. Crown Land (government-owned) lands are typically leased for agricultural or development uses.
Do I need to engage the services of an attorney when purchasing property?
It is strongly advised that you choose a local attorney. When representing the buyer, the local attorney provides an Opinion on the title to the property in addition to verifying that the title paperwork are correctly drafted and in good order. Because the lawyer is accountable if the purchaser discovers a problem in the title, this Opinion is regarded as equivalent to title insurance. The title opinion is covered by the law firm’s indemnity insurance.
Why should foreign property investors consider buying a home in The Bahamas?
From massive multi-million dollar estate estates to small condominiums or residences, the Bahamas attracts a diverse range of property investors. The Bahamas’ beautiful landscapes, along with a safe investment climate, have produced a desire for investment homes with favorable property returns. The Bahamian way of life is one that attracts visitors back again and again. While keeping the Caribbean’s laidback environment, the communities here have developed to include world-class lifestyle, fitness, epicurean, and social possibilities.
Is it possible for a non-Bahamian to purchase property in The Bahamas?
Yes. If you own a home worth $750,000 or more, you are eligible to apply for Economic Permanent Residency. Applicants with an investment of more than $1.5 million are given priority consideration.
After I purchase a property will I be able to repatriate the proceeds of sale whenever I sell it?
Yes, you can repatriate the entire earnings, including any profits, as long as you register the transaction with the Central Bank’s Exchange Control Department at the time of purchase.
Is it possible as a non-Bahamian to live in the Bahamas?
Yes. You can apply for yearly residency if you own a property worth at least $250,000. Property owners with a $500k property are entitled to seek for permanent residency in the Bahamas. An investment of more than $1.5 million will be given priority consideration for Permanent Residency in the Bahamas.
What taxes do you have in The Bahamas?
To begin with, there is no income tax, capital gains tax, or inheritance tax. With the exception of VAT, there is no sales tax (value added tax).
Customs duties on all items brought into The Bahamas are the government’s primary source of revenue. This tax may be as low as 0% for computers and computer software, as high as 65 percent for all non-hybrid autos, and as high as 220 percent for cigars. The average duty rate is roughly 35 percent. In most cases, the 12 percent VAT is added on top of the duty.
Do I need any special approvals in order to build on a property or to make any changes to an existing structure?
Yes. You’ll need to get approval from the Town Planning Board as well as a Ministry of Works building permit. This is something that a local architect or engineer could help you with.
Are there qualified architects, contractors and engineers available in the islands?
Yes. Most, if not all, architects in the Bahamas have international accreditations and were educated in the United States, Canada, or the United Kingdom. For architects, there is a municipal licensing board. Although the building business is regulated, the license requirements are not nearly as stringent. Civil engineers with international accreditations or certified engineers on staff are all employed by the leading contractors. Many of the smaller contractors are graduates of a reputable apprenticeship program and are quite proficient and experienced at completing home building projects quickly and efficiently. Civil, mechanical, and electrical engineers in the Bahamas, like architects, received their education in other countries and hold international accreditations from other nations, as well as a license from their respective local boards.
May I use the services of a non-resident architect?
Yes, but without a permit, that architect cannot work in the Bahamas. A licensed architect and local engineers must sign off on any building plans submitted to the Town Planning Board and the Ministry of Works. Local customs and processes are essential in getting the project done in any jurisdiction, and it is recommended that you use the services of local professionals.
Does FEMA help with flood damage?
Flood insurance is the most effective strategy to protect yourself against severe flooding damages. Standard homeowners or renters insurance policies nearly never cover the damage.
However, if you don’t have insurance and your home is flooded, you aren’t absolutely helpless. The federal government offers grants (via FEMA) and loans (through the Small Business Administration) to assist you repair flood damage to your house and cover additional costs.
What flood insurance doesn’t cover?
What Isn’t Included Moisture, mildew, or mold damage that could have been avoided by the property owner or that is not due to the flood. Even if the earth movement is triggered by a flood, damage is caused by it.
Who pays for flood damage after a hurricane?
The majority of individuals are unaware of the expenditures of cleaning up after a catastrophe. As Floridians discovered during Hurricane Irma in 2017, obtaining homes insurance claim assistance to help with the costs of cleanup and repairs proved difficult and time-consuming. Some consumers are still waiting for insurance claim repairs to be completed, and others are still waiting for reimbursement from their insurance companies even a year later.
Utilities
After a storm, technicians must often work around the clock to restore power, telephone, internet, and cable services, not to mention the costs of replacing damaged poles, running new lines, and cleaning debris. While power companies may receive funding from the federal government or other states to help cover some of the costs of cleanup, they usually foot the tab alone at first.
Any expenditures utilities spend out of pocket for cleanup after a hurricane, on the other hand, are frequently recovered through rate hikes. To recuperate the expenditures, the utility may charge a specific “cleanup” fee for a defined length of time.
State and Federal Government
After a hurricane, the state and federal governments also contribute funding to the cleanup effort. Food, cleaning materials, and temporary housing are provided with these monies for people who have lost their houses. The money will also be used to clean up debris and rehabilitate roads and other infrastructure.
When it comes to the budgets of state and federal governments, this money has to come from somewhere. Both will be able to recoup their costs in some way. To recoup the money they spent, state governments may, for example, raise the state sales tax rate or levy another tax. To recoup the funds, the federal government could sell treasury bonds, raise taxes, or reduce spending on other programs.
Homeowners
While homeowners’ insurance policies cover a large percentage of the costs of hurricane-damaged houses, there are deductibles that many people overlook until they need to file a claim. Hurricane insurance coverage in Florida may have a fixed monetary deductible or a percentage deductible.
With a fixed dollar deductible, you must first pay a certain amount out of pocket, such as $1000. The deductible is calculated as a proportion of the home’s value. So, if your house is worth $350,000 and you have a 5% hurricane deductible, you will be responsible for the first $17,500 in damages.
Aside from the deductible, you may face a surcharge or increase in homeowner association fees to cover the cost of cleaning and repairs to shared common spaces such as the pool and fitness center. If you own a condo, your association fees may increase to cover the deductible for roof and building repairs that are not covered by insurance.
As previously stated, residents of the area are ultimately responsible for the cleanup costs associated with a disaster in one way or another.
What happens if you don’t have flood insurance during a hurricane?
Hurricanes are particularly dangerous for homeowners that are protected for some catastrophes but not others, because they can cause numerous types of damage at the same time.
If your homeowners insurance covers damage from hurricane winds but you don’t have flood insurance, your claim could be denied in part or all if your home has water damage. Hurricane damage to your car, RV, or boat is usually not covered by homeowners insurance. The comprehensive section of a full coverage car, RV, or boat insurance policy would cover damage to these vehicles.
Even if your claim is insured, hurricanes present a unique problem in that they damage a huge number of properties at the same time. This causes labor and construction material prices to skyrocket just when you need them the most.
You may be able to choose between two types of home insurance policies while shopping for one.
How much does flood insurance cost in Florida?
In Florida, flood insurance typically costs between $500 and $600 per year. However, the price you pay depends on a number of factors, including your location, the elevation of your home, the amount of coverage you want, and who you buy from.