What Is Insurance Valuation?
A replacement cost assessment (also referred to as insurance valuation) is required under Section 85 of the NSW Strata Schemes Management Act 2015 No. 50 and Regulation 39 of the Strata Management Regulation 2016. It is used to calculate the costs associated with covering a residential or commercial building in the event of a total loss. An insurance valuation report needs to be undertaken independently to ensure that the costs associated are accurate. The report is then provided to the insurer with the recommended capital replacement value needed to adequately reconstruct a building.
Insurance Valuation/Replacement Cost Report Purpose
An insurance valuation report (also referred to as replacement cost report) is used to calculate the costs associated with covering a residential or commercial building in the event of a total loss.
Our knowledge and experience built over almost three decades in construction economics allow us to accurately provide comprehensive reports that are affordable and can be easily read by our clients.
Our detailed valuation report takes into consideration the following factors:
- Estimated reconstruction cost
- Demolition and removal of debris
- Escalation to commencement of construction
- Professional and authorities fees
- Escalation over life of policy
- Inflation
- Capital replacement value
- GST allowance
How Often Should The Sum Insured Be Reviewed?
Fluctuations in the property market can affect the economy, supply and demand, cost of construction and more. Replacement cost assessments should be updated at a minimum every 5 years, but we recommend updating your insurance valuation report yearly to avoid under or over-insuring the property.
Why Use A Quantity Surveyor For An Insurance Valuation Report?
An insurance valuation report needs to be carried out by a qualified individual. A quantity surveyor is a construction expert that is qualified to carry out replacement cost assessments. Though property valuers are commissioned to do the same, they may inaccurately include irrelevant costs such as land and market value. An accurate replacement cost assessment can minimise inflated insurance premiums and help maintain the maintenance funds.
Email us at admin@archi-qs.com.au with a copy of your strata plan or send us a message via our contact form and we will get back to you with our fee proposal.