Did you know, it is very likely that the building you manage or live in may be well under-insured due to the last 12 months’ local and global events? It is more important now than ever to update an existing Insurance Valuation Report.
If you have a property that has had an Insurance Valuation Report done in the last 12 months or longer, it is very likely that the building is under-insured due to the vast increases in costs from the unprecedented times we live in, relating to the present social, economic, and political international landscape.
With the COVID-19 pandemic, supply chain disruptions, recent inclement weather, the war in Ukraine and shifting relations between Australia and China and more, the cost for construction services and materials has increased significantly in recent years.
According to the Cordell Construction Cost Index (CCCI), residential construction costs increased by 11% over the last 12 months (to September 2022) nationally. In NSW alone, there was a 4% rise in construction costs over the 3 months to September 2022.
What are Insurance Valuation Reports?
An Insurance Valuation Report, also known as a Replacement Cost Assessment Report, is a document which highlights the costs of reconstructing your strata property if it is destroyed and there is a total or partial loss (such as in the event of a wildfire, flood, cyclone, earthquakes, etc). The assessment takes into consideration the following:
- Location and topography of the land.
- Site restrictions and constraints.
- Design implication and compliance with current and latest regulations.
- Heritage and other design features and finishes.
- Authorities and Professional fees.
- Demolition, removal of debris and re-construction.
- Escalation and inflation during the insured period.
- Cost escalation during demolition, design, approval, and procurement.
- Cost escalation during construction.
- Many other factors related to each particular property.
Why do the figures increase every year under usual events?
There are other typical factors which contribute to figure increases.
- Your property may need to meet updated, more demanding building codes, thus additional costs are added for your property to be deemed compliant for that year.
- Skilled labour costs in the involvement of demolition, land preparation, as well as construction, are factored in and the prices generally increase due to inflation.
- Similar materials used to rebuild your property tend to cost more over the years due to inflation.
- Should a catastrophic event occur, these events typically affect many properties thus demand for labour and building materials is higher and scarcer.
As mentioned, this currently climate has seen unprecedented increases in construction costs which make Insurance Valuation Reports more prudent than ever.
Who can carry out Insurance Valuation Reports?
“The preparation and delivery of Insurance Valuation Reports, also known as Replacement Cost Assessment reports, must be undertaken by a Corporate Member of AIQS, holding the Certified Quantity Surveyor designation” – Replacement Cost Assessments and AIQS Information Paper 1st edition July 2019
Update your Insurance Valuation Report today
Archi-QS’ Samuel Star is a Certified Quantity Surveyor (No. 2752) and has been producing Insurance Valuation Reports for the strata industry for over 28 years.
You can purchase a report from our company, where we can assure you that it will be thorough, tailored, and easy to read.
Contact us at (02) 9586 4401 and admin@archi-qs.com.au
Read more about Insurance Valuation Reports on our blog here.