Events that affect a wide geographic area and cause wide spread damage are called “catastrophe” perils in insurance terminology. You have the option to include coverage for natural catastrophes in your homeowner’s policy. These perils are grouped into types of coverage:
Hydro-meteorological (“weather related”) – hurricane, flood, tidal wave, hailstorm, tornado
Seismic – include earthquake and volcanic eruption
We are firm believers that a picture is worth 1,000 words. That said, why waste words when a few photos of hurricane and earthquake damage in Mexico will suffice?
Hurricane Damage and Risk in Mexico
Hurricane Wilma, Category 4, Cozumel, October 2005 (Courtesy of Cozumel tours website, This is Cozumel.)
Hurricane Jimena, Category 4, approaching Cabo San Lucas, September 2009
Hurricane Karl, Category 3, September 2010
Hurricane Wilma off the Coast of Yucatan Peninsula, October 2005 (courtesy NOAA)
Earthquake Damage and Risk in Mexico
Mexicali, Richter scale 5.1, April 2010
Mexico City, Richter scale 8.1, September 1985
"I lived in Mexico City in 1990 and 1991 and saw that the damage to high rise buildings downtown still had not been cleared away. Even though some structures were clearly unsafe by any measure, the city’s homeless had started to occupy them.
Following are a couple of maps depicting Mexico earthquakes that may help you better understand the potential for earthquake damage. We provide these maps to help you evaluate the earthquake risk in the geographic area where you property is located." - Alan Kohl
The map below is a seismic hazard map depicting the degree of EQ hazard for different geographic regions of Mexico, measuring the 10% probability of an EQ within any 50 year period. You will note that Mexico’s western region is rated the most serious EQ risk, followed by the central region from north of Mexico City to the border with Guatemala and Belize.
Learn the story behind this historic map.
Peak Ground Acceleration which identifies areas of higher probability for Earthquakes
Earthquakes Magnitude 7 and Greater since 1900
Conclusions about the need for insurance for catastrophe perils in Mexico
Most people agree that insurance against catastrophe perils like hurricane and accompanying tidal wave and flooding, and earthquake, is the most important coverage to have in Mexico. We agree. Going without just doesn’t seem a prudent option.
CO-PAYMENT participation in case of a “catastrophe” loss
Now that you understand the importance of insurance for catastrophe causes of loss we want to mention a unique feature about catastrophe coverage that is not a part of property insurance policies in the U.S. and Canada: Co-payment or, in Spanish, “coaseguro”.
You are probably familiar with the term “co-payment” from your health insurance. This is a concept in which the insured shares in part of the loss. The policyholder’s co-payment participation is expressed as a percentage of the loss after consideration of the deductible. For catastrophe perils in Mexico the co-payment percentage depends on the geographic zone location of your property; the greater the earthquake or hurricane risk, the higher the co-payment participation.
Here is an example of catastrophe loss repairs, settled on a replacement cost basis, assuming the dwelling is insured at least to 80% of its replacement cost at the time of loss:
|Cost to repair building damage:||$100,000|
|Amount of loss after deductible:||$99,000|
|Co-payment percentage of loss:||5%|
|Insured’s co-payment participation:||$4,950||(5% x $99,000)|
|Insurance company payment:||$94,050||($99,000 - $4,950)|
We all love that quaint palm frond covered beach type construction, right? Well, not quite.
In fact, all our policies exclude all coverage for Palapa construction . . . it just has no resistance to wind and fire, often resulting in a total loss.
To get your quote and issue your policy online, click here: Homeowners and Condos
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