Wet Months Ahead! – Is Your Building Insurance Up To Date?

After already enduring unprecedented wet weather events throughout 2022, Queensland is again bracing for widespread drenching rain and flooding due to a rare triple La Nina event.

This in addition to the regular QLD storm season that traditionally runs from October to March but in recent years has been starting earlier and ending later.

All areas in QLD are set to exceed their peak rainfall totals for November, meaning Brisbane could receive more than 130mm, the Gold Coast 150mm and the Sunshine Coast 180mm.

As a strata property owner, it is vital that your building has an up-to-date insurance valuation and has sufficient cover in the event that your Body Corporate is required to make a claim.

Why does the building need an Insurance Valuation?

The Body Corporate and Community Management Regulations requires that a body corporate must be insured for full replacement value, regardless of the original construction cost, to ensure you are properly insured for an insurable event.

The insurance must include for; escalation, demolition/removal of debris, re-design fees, consultant fees and local authority application fees. These are all significant costs over and above the construction cost.

Benefits of an insurance valuation?

A key aspect of protecting your home and investments is to ensure they are properly insured. Having an up to date and accurate insurance valuations of your building will ensure that in the event of a claim you will receive the correct payout. Having an up-to-date insurance valuation is essential to avoiding your building being under insured.

What happens if my buildings insurance valuation is out of date?

Neglecting to get an accurate and up to date insurance valuation can result in inflated premiums or insufficient cover in the event of a claim.

There are many additional factors affecting the replacement costs of a strata scheme, these include:

  • Inflation
  • Availability of labour
  • Building costs
  • Quality of finish
  • Shared facilities

 

Poor estimation of these costs could result in schemes being under‐insured, and subsequently, owners being unable to afford to replace their building.

The small savings made by seeking lower premiums on an under‐insured scheme are heavily outweighed when it comes time to managing your risk and replacing a building.

Rising Construction and Maintenance Costs Affect Your Insurance Valuation

Shortages of building materials and labour have increased the price of national residential construction. Builders and other tradespersons are reporting significant material delays on goods including timber, steel, windows, doors, roof tiles, bricks, electrical equipment and waterproofing insulation.

These are all materials that are commonly used for body corporate repairs. The cost of those items was rising a minimum of 15 per cent across all of those items and in many cases, over 25 per cent.

A rise in construction cost for both materials and labour will affect your building’s insurance valuation and Strata committees would be wise to instruct a new Building Insurance Valuation to ensure that their schemes are not underinsured.

How often is a building insurance valuation required?

An independent valuation is required every 5 years. However, given the current market and unprecedented number of extreme weather events it is recommended that bodies corporate undertake this step more frequently.

Insurance companies increase the building sum insured by 5% for every year that a valuation has not been conducted to allow for any increases in Consumer Price Index (CPI) and building construction costs. As a result, over five years the buildings’ replacement value can increase quite significantly, and in turn, the premiums are likely to increase as well.

We are aware of many instances where a body corporate have saved money on their premiums as a result of obtaining more frequent insurance valuations.

Importance of an accurate Insurance Valuation

  • Legally compliant
  • Insured correctly to full-replacement value
  • Pay correct premiums
  • Protect property values
  • Peace of mind

How Can We Help You?

Call us on 07 3435 5300 and one of our friendly consultants will help