A building insurance valuation is different from a market valuation (how much a person would pay to buy the property). The Strata Titles Act 1985 states that a Strata Company must be insured for the full replacement value in the case of a total loss.
A building valuation report is prepared to detail how much it would cost to:
- Clear the site of rubble in the case of a total loss
- Have an architect redesign the complex to original specifications (plus any noted improvements)
- Rebuild the property to the same or like specification i.e. building materials which are no longer produced would be substituted for the current equivalent.
- Professional Fees
- Contingency costs
- Escalation costs
What if my building is brand new, is the builders valuation sufficient?
It is recommended that the new owners obtain a professional valuation for rebuild purposes as soon as possible.
How much does a valuation cost?
You can contact your Strata Manager and request that quotes be sought. Generally speaking, quotes are based on the number of lots.
How often should we carry out a valuation?
There are no specific recommendations on the frequency reports should be carried out. However, we have sought advise from Valuers, who recommend that valuations should be carried out at least every 3 - 5 years.
Most insurers will offer to increase the Building Sum Insured (BSI) at a suggested rate each year to keep pace with inflation during the years between the valuations. However, this does not take into account all the other variables that affect building costs such as; bush fires, cyclone damage, etc.
For rebuilds, the cost of materials and the price of labour varies, with the industry experiencing large cost increases at times. This is why having periodic valuations is good strategic planning.