What Makes Up Building Sum Insured in Strata?
Understanding the Importance and Components of Building Sum Insured Presented by Tyrone Shandiman
In the below video, Tyrone Shandiman, Managing Director of Strata Insurance Solutions, delves deeper into the concept of Building Sum Insured. Understanding the components that contribute to this value is crucial for property owners across all states and territories in Australia. In this video, we will explore the critical factors in determining the Sum Insured, the importance of regular valuations, and the professionals who can assist in this process. Join us as we unravel the complexities of Building Sum Insured and ensure your property is adequately protected.
Importance of Building Sum Insured
Building Sum Insured is a critical aspect of property insurance in Australia, requiring strata buildings to insure their buildings for their full replacement value. This value is determined based on various factors, and compliance with this requirement is mandatory in all states and territories. However, some states, such as Queensland and Victoria, have additional regulations that necessitate obtaining an insurance rebuild valuation at least every five years to ensure the adequacy of the Sum Insured.
Components of Building Sum Insured
Let's take a closer look at the four key components of Building Sum Insured:
1. Full rebuild and replacement of the building in a total loss: The sum insured should cover the cost of rebuilding the entire structure from scratch in the event of a total loss.
2. Debris removal: The cost of removing debris after a total loss can be significant. It's essential to factor in the cost of debris removal when calculating the sum insured to ensure that you have enough coverage.
3. Professional fees: Town planners and architects are just a couple of examples of professionals whose fees need to be factored into the sum insured.
4. Escalation costs: Escalation costs refer to the impact of inflation on the cost of rebuilding your building. If you have a claim on the last day of your insurance policy, and it takes years to rebuild, you need to factor inflation into those costs as well.
Importance of Regular Insurance Rebuild Evaluations
Regular valuations of Building Sum Insured are crucial to ensure property owners maintain adequate coverage. As construction costs, inflation rates, and market conditions fluctuate over time, relying on an outdated Sum Insured could lead to underinsurance or over-insurance. To mitigate risk, we strongly recommend seeking the services of a qualified Quantity Surveyor who specialises in insurance rebuild valuations. These professionals have the expertise to assess the property's current value, factoring in market dynamics and potential risks, and provide an accurate assessment of the Sum Insured.
In conclusion, with insurance requirements and regular evaluations are essential to ensure that the Sum Insured reflects the current replacement value of the property. Seeking the assistance of a Quantity Surveyor for insurance rebuild evaluations is highly recommended to mitigate the risk of under-insurance or over-insurance.
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This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.