Insuring Heritage Impacted Buildings
The NSW Government has regulations in place to protect historic properties with special architectural or historic interest. Where a building has been officially listed as a heritage item, legislation may prevent or limit the possibilities of redevelopment, alterations and additions by imposing restrictions and time-consuming approval processes.
This inevitably impacts the cost of construction and in turn, the building sum insured (Capital Replacement Value) for the purposes of partial or complete replacement of building in the event of disaster.
There are two scenarios that may occur:
1. Substantially destroyed: Where a heritage building is substantially destroyed to the extent that none, or very little, of the original building remains, much of the asset’s heritage value would most likely be lost. In this case, heritage restrictions of redevelopment may be lifted with the owner being able to replace the building or redevelop the site in accordance with most current planning requirements, unencumbered by any of the former heritage restrictions.
2. Partially destroyed: Partial loss of a heritage building may be worsened where legislation requires making good damaged areas which require repairing or reproducing some or all of the building in a style and form of construction consistent with the remaining original structure. Consequently, increasing costs due to the engagement of specialised trades and the likes.
In any case, a Certified Quantity Surveyors' assessment of the property will take into account the applicable scenario when arriving at the recommended Capital Replacement Value.
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