Insurance Valuation Report

The report is designed to be published only by the Strata Manager to unit owners and the respective insurance company.

The calculations in the report will be based upon the current estimate by the Cordell Building Cost Guide, physical cost estimates and industry expertise.

The report will be in the following format:

Replacement Building/s and Improvements: $0.00
Allowance for:
Cost Escalation $0.00
Calculated at 5% over the period
Professional Fees $0.00
Demolition $0.00
GST Component $0.00
Total Building Replacement cost estimate $0.00

Are You Paying Too Much for Insurance?

Building costs change over time. However, some think that construction costs only increase. This is not true as market forces dictate construction costs. When construction activity is high, construction prices tend to increase. While when construction activity is low, prices may drop.

Therefore, just increasing the insured amount for the complex by CPI percentage may result, and has in many cases, in the complex being over insured causing unwarranted increases in premiums costing many thousands of dollars.

Regularly prepared Insurance Valuation reports will result in only paying the required amount in premiums. Due to the volatile market we live in, QBM recommend that you gain a fresh Insurance Valuation report each 3 years at the latest.

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Are You Under Insured?

What is worst than paying too much for insurance? Paying too little and having the complex under-insured.

As stated previously, market forces dictate construction costs. However, inflation also plays a significant role in cost increases. Although this is not so clear cut as one may guess.

 

Therefore, just increasing the insured amount for the complex by inflation may result, and has in many cases, in the complex being totally under-insured causing such a risk that very few unit owners could survive financially should a catastrophic event occur.

Regularly prepared Insurance Valuation reports will result in only paying the required amount in premiums.  Due to the volatile market we live in, QBM recommend that you gain a fresh Insurance Valuation report each 3 years at the latest.

What is Included?

Some of the key items of cost included in an Insurance Valuation:

The replacement construction cost of the building based at current market rates and conforming to statutory changes implemented since the original date of construction
Demolition costs
Due allowance for cost escalation
Professional fees

Right now, are you properly covered?

Today there is an even greater array of unexpected risks facing organizations, from fires and natural disasters to terrorism and other man-made hazards. That’s why it’s imperative that all complexes are properly covered. Failure to do so can turn an unfortunate incident into the event that leaves the owners with out of pocket expenses to meet.

Beware of the traps

Too often, Insurance Valuations are based on market appraisals. Market appraisals provide a relatively accurate valuation of the purchase price of a given property on the open market, but usually following a catastrophic event, companies have to rebuild facilities, not simply purchase them. Therefore, a whole different set of assumptions and valuations must be used in determining the appropriate amount of insurance coverage. It’s a matter of replacement costs versus market value.

Another common mistake is to use a capitalization formula, basing the replacement value of a property on the previous year’s assumptions—and simply increasing the numbers. Unfortunately, these figures are often inadequate and inaccurate, leading to insufficient coverage or overpaid premiums.

 

Don’t leave it until you’re making a claim to find out whether you’re adequately insured—talk to QBM now