FOR many Jamaican homeowners, property insurance is seen as just an annoying appendage that comes with getting a mortgage — a hefty financial burden that must be tolerated, with little or no upside. That was before Hurricane Melissa.

Now, many who dutifully, even if reluctantly, paid their premiums for years wait with bated breath for claims to be processed so they can right the wrongs so harshly inflicted by the Category 5 storm on October 28, 2025. But at the back of their minds there are worrying questions such as whether their rates will skyrocket next year. Should they give in and add contents insurance, even though it would mean paying more? How long does it take for a claim to be processed? What if you discover additional damage after you settle? And for those whose coverage expired after Melissa and now find themselves in limbo as they wait for their claim to be settled, what are the options available?

The Jamaica Observer’s Real Estate on the Rock sought answers from past president and executive member of the Insurance Association of Jamaica Peter Levy. He is also managing director of British Caribbean Insurance Company Ltd (BCIC). Read on for his replies.

Q: In general, does filing a claim mean your rates will automatically go up the next year? What if it’s a natural disaster, such as a hurricane?

Peter Levy: Not automatically. If the claim investigation reveals information that the particular building is non-standard, from an insurance perspective — for example, more exposed to flooding than previously known — there might be an increase in rates to reflect that new knowledge. If there is a widespread market reaction to a catastrophe that results in higher rates, that can apply across the board to affected and unaffected policies alike.

Q: In the aftermath of Hurricane Melissa should we brace for an increase in property insurance?

Peter Levy: I don’t expect significant change.

Q: In plain language, how do you calculate how much you will get from a claim when you factor in deductibles?

Peter Levy: The policy covers the cost of repairs caused by the event, less a deductible. For hurricanes and earthquakes, the deductible is two per cent of the sum insured, so for a $20-million building, the deductible will be $400,000. For fires and most other types of loss, the deductible is much lower but if the sum insured — the amount of coverage on the policy — is less than the rebuilding/replacement cost at the time of the loss, the claim will be reduced. If the sum insured is 75 per cent of replacement cost, the claim will be reduced to 75 per cent of the repair cost, and then the deductible will be deducted to arrive at the final claim amount.

Costs for removal of debris are also covered, up to a limit. Homeowners’ policies automatically include coverage for additional living expenses — for example if you have to move out while repairs are being carried out — or loss of rent if you are a landlord.

Q: How long should/does the processing of a claim typically take?

Peter Levy: It depends on the complexity and extent of the claim but generally speaking, a range of one to six months. In a post-catastrophe scenario claimants are dealing with a shortage of qualified experts to prepare repair estimates, and that is causing delays in arriving at the claim amount.

Q: What are the pros and cons of filing a claim quickly? For example, some problems may take some time to emerge, such as tiles lifting up months after flooding.

Peter Levy: The biggest pro is that the quicker you file, the quicker the process can get under way. If there is a concern about damage becoming apparent after filing, the claim can be amended at any time up to the point of final settlement. Consult with experts for guidance on the likelihood of damage showing up after the fact. Standard cover includes temporary repairs, meaning that the policyholder can undertake emergency repairs — for example boarding up a broken window — without having to wait for the claim to be settled. This allows damaged premises to be made habitable and can prevent additional damage.

Q: If you are waiting to reinsure, what is your level of exposure? Is it the same as if you have no coverage? What conversation can be had with the company in the interim?

Peter Levy: Anyone in this situation should talk to their insurance company. It is possible to arrange a reduced level of coverage to protect yourself while the claim is being processed and the repairs performed. Mortgagees should also be included in the discussion since it is usually a requirement of the loan that coverage be maintained.

Different companies may treat this differently. At BCIC, if the damage is not severe we will renew the coverage as is. For more severe cases, for example the house is not occupied, we will still offer renewal but with reduced benefits, for example, the public liability cover and the additional living expenses benefit would be removed. But it’s not fair to not provide the coverage needed, and in any case mortgagees will require the perils coverage to remain.

Q: If you pause insurance, how easy or hard is it to reinsure?

Peter Levy: It is usually not difficult, requiring only a conversation with the insurance agent or customer service representative. Provide photos of the repaired premises so that the insurance company can verify the condition of the building. The duration of a pause [for example a year or two vs six months] isn’t an issue.

Q: Explain the pros and cons of rebuild valuations

Peter Levy: Because of the effect of inflation over time, insurance values should be reviewed regularly. Homeowners’ policies have a 15 per cent margin — meaning once the sum insured is within 15 per cent of the rebuilding value at the time of the loss, there is no reduction in claim. Commercial insurance policies have no margin.

Policyholders should review annually but this doesn’t necessarily mean paying for a valuation every year. If you know the square footage of the building, which you can find on a previous valuation report, you can get an updated estimate of the rebuilding cost from the original valuator or any experienced contractor/builder. BCIC also offers a free online valuation calculator for residential properties at https://bciconline.com/valuation/. Anyone can use it, not just BCIC customers.

Q: What are the pros and cons of contents insurance?

Peter Levy: A few weeks after Melissa I visited a new housing development that had a number of units damaged. I saw house after house with a pile of ruined furniture, appliances, and personal effects on the sidewalk, waiting for the garbage truck. The buildings are all insured either individually by the owner or under the mortgage company’s group policy, but very few of those people likely insured their contents. Many of them may still be on the hook for hire purchase payments for those contents long after the items have been taken to the dump.

That can be a major setback, and the relatively low cost of contents insurance — less than one per cent of the value each year — avoids that outcome. The only cons are the cost of the insurance and the need to review the sum insured to ensure the policy keeps up with costs. But, having the discipline of an annual review for both the building and the contents values just before the renewal date of the policy is worth it. Do a room by room survey and add up the total. You don’t have to list every item. You can have a total per category, for example furniture $3 million; clothing $300,000; appliances and TVs $400,000. Only very expensive items like pieces of art, jewellery, or high-end equipment need to be itemised with individual values.

Remember also that tenants can buy contents insurance so that they too are protected.

LEVY… the quicker you file, the quicker the process can get under way