When it comes to your building insurance, we believe that assessing the reinstatement value for your property is critical. This requires obtaining an insurance valuation, which is carried out by a Registered Valuer. This can be arranged by the Body Corporate Manager or Property Manager.

An insurance valuation is used to determine the total sum insured on your insurance policy, which is the maximum amount you can claim for. An up-to-date valuation for insurance purposes is vital to ensure your asset is insured for the correct amount. Having insufficient cover could mean that you will be left short changed. If your property is not insured for the correct amount, the insurance payments may not cover the cost of a rebuild if it were to arise.

In our opinion, an insurance valuation should be carried out every one to two years depending on your risk appetite. This will ensure that you have sufficient cover for your building.

It’s important to keep in mind that an insurance valuation value differs substantially from a market valuation. An insurance valuation is derived from the replacement value of the building including allowances for demolition and inflation. It does not consider the land value, as generally land is not insured.

The cost for insurance valuations can vary depending on the size or complexity of the property, although typically you can expect a starting cost from $600. This cost may be a recoverable expense from your tenant, depending on the structure of the lease.

When your building is under Commercial Realty's Property Management, we can assist you in understanding your insurance, put you in touch with advisors, and let you know when you are due for an updated insurance valuation.

The information provided in this article is an opinion and of general nature. It is not intended to be a substitute for professional advice. You may seek individual professional advice from a registered financial advisor.