1What is a Building Insurance Valuation?
A Building Insurance Valuation is a professional assessment carried out by a Valuer of the replacement cost of all improvements within a strata scheme, community scheme or stand alone property. The Building Insurance Valuation also allows for the escalation of construction costs over the period of insurance, and the periods for documentation, and construction of the replacement building, an allowance for professional fees, demolition and removal of debris, gst, amongst other things.
2Do the owners need to get a Building Insurance Valuation?
Yes. There is legislation requiring Strata Companies to properly insure the buildings under Division 4 of the Strata Titles Act and the prudent approach is to obtain a Building Insurance Valuation from Reserve Fund Plans so that they can meet their legal obligations. We have $10M Professional Indemnity Insurance to provide further degree of comfort for the Strata Company and the owners.
3What is the benefit of obtaining a Building Insurance Valuation?
The benefit of obtaining a Building Insurance Valuation regularly is to ensure that the sum insured is in line with the real cost of replacing the improvements in the case of total destruction or partial damage. We recommend that an annual valuation be carried out for large strata and community schemes, rather than the Strata Company or Property Owner simply accepting some arbitrary escalation well above the actual rise in construction costs from insurance companies and brokers.
4Does a Building Insurance Valuation increase the amount that owners have to pay on an annual basis?
No. In fact, by obtaining a current Building Insurance Valuation from Reserve Fund Plans the Strata Company and Property Owner would rest assured knowing that they are paying the appropriate premium based upon an accurate and current recommended sum insured.
5Can a Strata Company or the Owners vary a Building Insurance Valuation?
The Strata Company must insure the building for 'at least' the recommended sum insured from the latest Building Insurance Valuation. If the Strata Company or Property Owner and the Insurer agree, the property can be insured for an amount higher than the recommended sum insured obtained from the last Building Insurance Valuation from Reserve Fund Plans.
6How often should a Building Insurance Valuation be reviewed?
It depends on the type of property. In our opinion the following is a reasonable guide to a minimum frequency for obtaining revaluations.
- Lot 1 in most Community Schemes | Each 5 years
- if Lot 1 includes major improvements sheds, cabana, pool, recreation hall, community hall, bbq areas, then | Each 2-3 years
- Three level walk up (12 and 18 packs) | Each 2-3 years
- Villas, townhouses and the like | Each 2-3 years
- Six level and more schemes (residential or other) | Each year
- Industrial office warehouses - old | Each 1-2 years
- Industrial office warehouses - new | Each 2-3 years
- Commercial office buildings - large | Each 1-2 years
- Commercial office buildings - small | Each 2-3 years