Homeowners and Landlords Urged to Update Property Valuations as Insurance Gaps Widen and Rebuilding Costs Rise

Kingston, Jamaica — 23 April 2025

Leading real estate and insurance professionals are urging Jamaican homeowners and commercial property owners to review and update their property insurance valuations before the 2025 hurricane season, warning that a significant proportion of Jamaica’s insured property stock is carrying outdated valuations that leave owners materially underinsured. The problem is straightforward: insurance coverage is set based on a property valuation, and if the valuation was conducted several years ago — before the construction cost inflation of 2022 and 2023 pushed rebuilding costs sharply higher — the insurance payout in the event of a total loss will cover far less than what it would actually cost to rebuild the property at today’s prices. A homeowner who believes they are fully covered may find, after a hurricane, that their policy pays out for a house that cost J$15 million to build at 2018 prices when the actual rebuilding cost in 2025 is J$30 million.

The gap between insured value and actual replacement cost is not unique to Jamaica, but the island’s exposure to hurricane risk makes it particularly consequential here. A single major storm event can result in total losses for thousands of properties in affected parishes, and for each of those property owners, the adequacy of their insurance coverage at the moment of loss is the difference between full recovery and partial ruin. The urgency of the valuation update message has been amplified by the recent experience of Hurricane Beryl in 2024 and Hurricane Melissa in 2025, both of which generated significant structural damage across affected areas and exposed the underinsurance problem in practice.

What Drives the Valuation Gap

Several factors have combined to drive the gap between insured values and current rebuilding costs. Construction cost inflation between 2021 and 2023 — driven by global supply chain disruption, higher prices for imported materials including steel and lumber, and increased freight costs — pushed the per-square-foot cost of residential construction in Jamaica substantially higher in a short period. Material costs have since stabilized, but the 2021-2023 inflation has been largely permanent: costs have not reverted to pre-pandemic levels, they have simply stopped rising as fast. A property insured in 2019 at its then-correct replacement value may now be insured at 60 to 70 per cent of its actual replacement cost — a meaningful shortfall.

Exchange rate movements also contribute. Much of Jamaica’s building material input is imported, and the cost of those inputs in Jamaica dollars has increased as the exchange rate has moved over time. Insurance policies denominated in Jamaica dollars do not automatically adjust for this dynamic — the nominal coverage amount stays fixed until the policy is updated with a fresh valuation.

Climate-Adjusted Valuations

A forward-looking development in valuation practice that professionals are anticipating is the integration of climate and environmental risk factors directly into property appraisals. Rather than valuing a property purely on the basis of comparable sales and replacement cost, appraisers may increasingly factor in a property’s long-term viability given its flood risk, storm surge exposure, coastal erosion trajectory, and resilience of construction standards. Properties that have been built or upgraded to Category 5 wind resistance standards — following the 2023 update to Jamaica’s building code — would carry a premium in this model, reflecting their lower expected damage loss in a major storm. Properties in high-flood-risk locations without mitigation features could be discounted. This approach is still in development in the Jamaican context but reflects international valuation trends in climate-exposed markets.

For mortgage purposes, lenders already require a current valuation as a condition of mortgage approval. But existing mortgage holders who had their properties valued at loan origination — potentially years ago — carry the same underinsurance risk as outright owners. Lenders have a financial interest in ensuring that the collateral behind their mortgage portfolio is adequately insured, and some have begun encouraging or requiring periodic revaluation of mortgaged properties as a portfolio risk management measure.

The Cost of Getting it Right

“A property valuation update costs a fraction of what it costs to be underinsured after a storm,” said Dean Jones, Managing Director of Jamaica Homes. “The homeowners who found out their coverage was inadequate after Hurricane Beryl or Hurricane Melissa did not do anything wrong — they just did not know that the cost to rebuild their house had doubled since they last had it valued. An updated valuation from a certified valuator is a straightforward exercise. The insurance premium increase that results from raising coverage to the correct level is money well spent. Jamaica is a hurricane-exposed country. Every homeowner owes it to themselves to know their coverage is real.”

Property valuations in Jamaica are conducted by certified valuators following International Valuation Standards. The National Land Agency maintains a list of registered valuators. Most valuations for residential properties are completed within a few weeks of engagement and the fee is typically a fraction of a per cent of the assessed value. Homeowners can commission an independent valuation at any time and use the result to update their insurance coverage through their insurer or broker. For properties that have undergone renovations, extensions, or improvements since the last valuation, the need for an update is particularly acute — improvements that were not captured in the original valuation are not covered by the original policy.

Follow Jamaica Homes on Youtube @jamaicahomes and Instagram @jamaica_homes and on Facebook @jamaicahomesnews Send us a message or email us at onlinefeedback@jamaica-homes.com or editor@jamaica-homes.com