How important is it to have your assets covered with homeowners insurance in Costa Rica? Osa Tropical Properties team recommends it to all of our clients. Read on to learn why, and also hear what expert insurance broker, Danilo Villalobos of Seguro CR, has to say about home insurance coverage in Costa Rica.
Purchasing a property in Costa Rica is likely to be one of the biggest investments of your life. Homeownership is something to be proud of and worth protection, especially considering how inexpensive, easy, and reliable homeowners insurance in Costa Rica is for those who do their due diligence and choose a great broker.
Danilo Villalobos of Seguro CR is one of the most recommended insurance brokers across all of the Costa Rica expat pages that I follow. He represents companies like Oceanica, Lafise, Mapfre, and INS — Costa Rica’s former monopoly insurance provider.
“Home insurance is provided by several companies like INS, Oceanica, Lafise, Mapfre, etc and I broker for them all,” says Danilo. “Their coverages are basically the same and the rates are pretty similar between them so I usually recommend INS for its solid history.”
The INS (Instituto Nacional de Seguros – National Insurance Institute), is a mixed public/private capital enterprise with majority government ownership. It was once the only insurance provider allowed in Costa Rica and continues to be the most trusted and widely used.
However, home insurance in Costa Rica is easily obtained from any of the providers available today. You do not need to be a Costa Rica resident to apply for any type of insurance. You will receive personalized customer service with all of the reputable brokers, who will almost always speak fluent English. They will file any claims for you and guarantee success for reimbursement.
Click here to read our other report on the basics on insurance in Costa Rica
Costa Rica Homeowners Insurance Coverage Policies
The four types of home insurance policies in Costa Rica are:
FIRE AND NATURAL DISASTER POLICY
Joining two of the most important categories of home insurance in Costa Rica, known as ‘Coverage of Direct Damage to Real Estate’ (Coverage V) and ‘Coverage of Natural Disasters’ (Coverage D), this type covers the house and against the following:
- Fire and Lightning (covered under category ‘V’)
- Winds, Hurricanes, Cyclones, Falling Objects (i.e. trees), Explosions, Smoke, etc. (covered under category ‘V’)
- Floods, Landslides (covered under category ‘D’)
- Quakes, Tremors, Volcanoes (covered under category ‘D’)
Coverage V offers protection against the structure of the home. Coverage D also protects the contents of the home in addition to the structure.
Contents Insurance in Costa Rica, known as ‘Coverage Y’, covers instances of forcible entry and will reimburse the value of all items in the house except cash, jewelry, and securities. INS will accept the risk for works of art, collectors’ items, antiques, etc. but this is not automatic and must be detailed and appraised.
Theft premiums average 1% per year of the total specified on the list of insured items. The exact premium you pay depends on the features and location of the home. It may take a month or more to get theft insurance coverage operable.
Also known as renter’s insurance, this option takes care of only the contents of the home rather than the structure, which is not a renter’s liability. If you are renting a home in Costa Rica and you’ve insured the contents of your home against robbery, then a reputable insurance company will reimburse you for the current replacement value of anything stolen from you at current market value.
Less than 45% of people in the U.S. insure the contents of rental properties. It is one of those things which shouldn’t be overlooked if you have valuables that you want to protect.
This covers the amount awarded by Costa Rican courts for incidents taking place within the confines of the house. As Costa Rica is not a litigious country, this insurance is not important for the average householder.
Known as ‘Coverage K,’ civil liability insurance covers injury or death of third parties, or damage to a third party’s property, caused by something within the insured premises or up to 1 kilometer away (for example, a fire that started in your home burns down nearby homes).
Coverage K includes court costs related to civil liability lawsuits, as well as medical expenses and accidents caused by policyholders or their animals. It does not cover extraordinary events like war, terrorism, nuclear accidents, malicious acts, or damages caused by the inexcusable fault of the third party.
HOA Insurance Coverage
Many people buy property within a condominium complex where the rules generally require them to contribute to a fund that insures the entire property.
All condominium complexes have a homeowners association (HOA) that charges individual condo owners HOA fees to cover swimming pool maintenance, gardening, security, and the like. These costs are usually shared by all owners and also include insurance for the physical property.
However, insuring the contents of each condo is up to each individual homeowner. You won’t be required to insure the contents of your condo, but you alone will be shouldering that risk. If you’re looking to buy in a condo development, be sure to ask what exactly is covered by the HOA fees.
Cost of Homeowner’s Insurance in Costa Rica
A full coverage homeowners insurance should cost around 0.25% of the home’s value per year. A quote from Seguro CR for a $600,000 home with $40,000 of contents insured and $50,000 in liability coverage came out to $1,557 annually, which is around $4.26 per day. That’s less than I used to spend on my daily cup of coffee at my local cafe.
Danilo Villalobos says that to receive an estimate, all he needs is the market value of the property and the replacement value of the contents you want insured.
“This will cover fire, natural disasters (earthquakes, winds, floods, landslides, etc), theft, and liability,” says Danilo.
Insured values and premiums are in Costa Rican Colones or Dollars. People typically choose to pay for insurance in Dollars to avoid inflation because of Costa Rica’s annual currency devaluation against the US dollar. If you do pay in Colones, it is best to periodically revise your policy to adjust for inflation.
All policies have deductibles, which in most cases are fixed by the insurance provider. These deductibles average around 1% per claim on most policies.
Formal applications must be completed and signed in a claim. In most cases, the item must be inspected and the premium paid before the insurance policy becomes effective.
Reasons To Have Homeowners Insurance in Costa Rica
Osa Tropical Properties realtor, Rebecca Rowntree, is adamant with her clients about how much she values the importance of full coverage home insurance. “Coverage here in Costa Rica is really comprehensive and includes fire, landslide, earthquake, flood — basically any sort of ‘Act of God’ that could damage the structure of the home.”
Rebecca owns a popular BnB in Ojochal, Costa Rica, called Vista Villas, and she has had a number of instances where her insurance has paid off considerably. She has also had clients who have followed her advice and have been grateful to have done so.
One example that sticks out for Rebecca are recent clients who have a property rental. They purchased a solid concrete structure home for which Rebecca convinced them to get at least basic coverage on their house. They did not think that they needed fire protection since their construction did not seem likely to burn. However, they did experience a small electrical fire that they were able to put it out early, although they still incurred damage to their property.
“Fortunately, the owners were home at the time and they were able to put it out,” says Rebecca. “But it would have taken more than an hour for the local fire department to reach the house. If they weren’t home it could have burned down the house. In their case, their insurance policy had not actually been put in effect yet. But because there had already been an inspection on that home by the insurance company and we had applied for the insurance, they actually did extend coverage.”
Two other reasons that Rebecca recommends homeowners insurance in Costa Rica to all of her clients are earthquakes and landslides — unfortunate phenomena that, although rare and typically minor, are a likelihood in volcanic nations and can be devastating to gamble against.
“Some people may not be aware of how common it is to have minor earthquakes that cause minor damage,” says Rebecca.
Being in the tropics, in the lush, green jungle, many of Costa Ballena’s homes are exposed to some extreme elements, like heavy rains. A sudden deluge, especially after dry season, can cause earth movements that result in landslides.
“I recommend home insurance for people who live in a flat area in town where there could potentially be a catastrophic circumstance caused by a landslide that could damage their home from above,” says Rebecca. “Or like in the case of my hotel, properties built on the edge of a slope that could have earth movement causing a part of a structure to slip down the hill.”
Rebecca emphasizes that the dangers of these things happening are rare but well worth considering, especially with the low cost of insurance in Costa Rica. “This is not to scare people, because the majority of these instances are very minor,” says Rebecca. “But they are a reality of living in a volcanic landscape.”
“Another aspect that is important for home insurance is particularly if the property is going to be rented, an additional policy should be added, which is really cost-effective and not expensive. That would be a liability policy. Even just a $50,000 liability policy will suffice because the lawsuit laws in Costa Rica don’t allow people to sue for millions. If somebody is going to rent out their home, having liability insurance is critical. This type of insurance would cover things like a guest jumping into the pool and breaking their arm, or if someone tripped and fell and chipped a tooth. It covers personal injuries of all kinds.”
Receiving A Payout For An Insurance Claim in Costa Rica
In my research on this topic, I heard rumors that insurance companies in Costa Rica do not always pay out claims in cases of theft. But Danilo says that this is not the case.
“Contents insurance does cover theft without any additional requirements, so no need for a security system. This goes for all of the companies I represent. Once they accept the risk, they are to pay out the claims. This is the reason why I take pictures and describe the characteristics of the place in detail.”
In my own experience, insurance in Costa Rica is easy and efficient. While house-sitting for Rebecca a few years ago, I accidentally slipped and broke my hand hitting the ground. I went to the public hospital in Cortes to get an x-ray and learned that I needed to reset my bones to regain movement. After consulting others in the area who had recently broken bones, I decided that since I was going to be paying for surgery anyway (I was not yet a resident), I would go to the private hospital in San Isidro to see a specialist osteopath that was highly recommended. I was thrilled to learn that Rebecca’s hotel’s liability insurance would cover all of the costs of my x-ray, doctor’s visits, and surgery — even in the private clinic. The hospital and specialist provided all of the necessary paperwork for Rebecca’s insurance policy to cover the surgery. I paid for the surgery upfront but I was paid back within a month.
Rebecca says that she chose her insurance provider after a lot of research into other expats’ experiences with the different options available in Costa Rica.
“I was doing my research on the different insurance options,” says Rebecca, “and what I kept reading time and time again was that INS is the fastest insurance company in Costa Rica to pay out in the most reliable manner.”
What Is The Best Time To Buy Homeowners Insurance in Costa Rica?
The best time to buy home insurance is when you buy your house. This is because you know the exact market valuation for your home and have a good estimate of what your contents are worth, especially if you are furnishing your home.
This value will need to be adjusted over time as you add extras like new appliances, additional bedrooms, a swimming pool, etc. Regular revaluation of your home’s market value is recommended using a professional appraiser or your insurance broker if they offer this service.
When purchasing a property in Costa Rica, Rebecca says that it is important to transfer any existing policy in place from the seller to the buyer at closing because the policy could have a “grandfathered” landslide coverage that could potentially not be obtained again in the future. “The cost of the current policy is prorated as of the closing date of the sale/purchase and the seller is reimbursed accordingly for any advance policy portion prepaid. The attorney facilitates the policy transfer pre-closing with the parties signing papers for the insurance company, and post-closing they files those papers with the insurance company.”