Reinstatement & Replacement Insurance Valuations
Insurance valuations ensure that your building is fully covered in case of fire or natural disaster. Mabi Services can provide an independent professional ‘Insurance Reinstatement and Replacement Valuation’ on your building that will provide a sum insured valuation that fully complies with the Owners Corporation Act 2006.
Obtaining a valuation is important in order to:
- Protect underinsured stakeholders from being financially exposed;
- Provide independent advice to eliminate potential conflicts of interest; and
- Meet legislative requirements
Insurance underwriters and industry best practice recommends all buildings have an independent insurance valuation undertaken by a company within depth knowledge of construction practises and costs, who are specialists in the strata industry.
The Insurance Valuation provides an important check on the total cost of replacing your property should it be destroyed or damaged.
Our detailed assessment Includes:
- Demolition & removal of debris, (including asbestos removal if applicable)
- Associated construction costs (including construction difficulty assessment, BAL assessment, heritage factors, site slope and conditions, site protection works, traffic management etc),
- Allowance of professional fees,
- Calculations for inflation during the re- documentation and re-construction periods and;
- Loss of Rent / Emergency Accommodation forecast based on the estimated timeframe of the re-construction period.
We recommend that a revaluation be carried out at least every three to five years to ensure that the escalation in construction costs and professional fees have not exceeded the forecasts within the original valuation. Experience has shown us that a large majority of buildings have not had the required insurance in place when called upon. All our valuations are signed off by a registered valuer with more than 30 years’ experience.
Reinstatement & Replacement Insurance Valuations endeavour to ensure that properties are properly insured for the correct amount in the event, that a total or partial loss occurs. It assists in ensuring that properties are adequately insured over periods where polices rise appropriately considering factors that may not have been relevant previously (i.e. rising building costs).
The Owners Corporation and Other Amendment Act 2021 33 Valuations if building states that an owners corporation must obtain a valuation pf all buildings that it is liable to insure. It is important to note that tier five owners corporations are from this (1-2 lots).
Reinstatement & Replacement Insurance Valuation should be an annual discussion with the committee. We recommend that larger developments (tier 1 and 2 owners corporations) consider valuations every 2-3 years. Smaller sized developments (tiers 3-5 owners corporations) should complete valuations between 3-5 years.
The market value of a property has no bearing on the rebuild costs of a development.
The replacement value includes the construction costs, costs associated with removal of debris, labour and materials, compliance with current building codes, planning provisions, professional fees, and taxes.
It’s important to get a new valuation completed when significant works have taken place. This can include additional amenities such as swimming pool, tennis court and other amenities. Improvements within lots include upgrades in the quality of finishes such as the type of benchtops, flooring and appliances than were previous installed. When considering renovations it is important to consider if additional value been added or has a refurbishment to the same standard been completed. Valuations account for lots to be rebuilt to the standard that they were prior to a loss. Examples of renovations include repainting, plumbing, electrics which are all accounted for in the original valuation.
Generally, the reason that a sum insured amount has gone down is because the property hasn’t been regularly valued and the policy amount increased at a higher rate annually than required. Over time this can proportionally build up the sum insured figure over the required amount. There are multiple reasons for policy increases.
Lightweight Construction is being used more regularly during construction. It includes products such as rendered foam, mod wood type boards which is commonly seen on the upper levels of townhouses and apartment building. These products are generally similar in cost for build purposes, however, they have different fire ratings, which means that insurers want as much information about what specific products are installed on the site. The best way for accurate building information to be outlined on a report is by including the building elevation plans if available.
A cladding assessment is used to determine the amount of cladding used at the development as a percentage. An insurance valuation does not include these breakdowns as a percentage, but this information is beneficial for insurers. Therefore if you require a cladding assessment, please contact our office.