Estimating cover for building insurance

Discussion in 'Property Management' started by paguatao, 31st Jan, 2015.

  1. paguatao

    paguatao Member

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    What's the best way to go about estimating cover for building insurance?

    We bought average 3x1 home (607sqm land) in 2007 for $305 000. I think land value around then was $160k. We insured house for about $160k. Insurance keeps increasing the cost so it's now $194k.

    I've used an online insurance estimator and it's come in at replacement cost about $290k to rebuild/replace. That seems extraordinarily high?

    I've tried to find out what the land value might be now, but there's no vacant land there anymore. Do I just look at surrounding areas?

    Are these estimates the best way to go? I know that replacement cost to rebuild is different to market value of home, but still, looking at similar houses that aren't selling for more than $310k, I'm reluctant to increase the amount.
     
  2. Jamie M

    Jamie M Mortgage Broker - Oz Wide

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    I'd over insure - the premium for an extra $50k - $100k cover shouldn't be too ridiculous.

    Cheers

    Jamie
     
  3. Scott No Mates

    Scott No Mates ...and people wonder why?

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    What is included in the replacement cost? Demolition of the existing, consultant fees, council costs, alternative accommodation whilst rebuilding? Costs escalate quickly.
     
  4. SK Investments

    SK Investments Member

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    The land value shouldn't be a factor.

    What you need to consider are;
    -Total current market rate to construct a new house of the same/similar type from the ground up.
    -Contents (this includes carpets/curtains/blinds possibly appliances etc)
    -Demolition costs
    -Landscaping, is it covered?
    -Out buildings (garage/shed)
    -Temporary accommodation

    And probably a bunch of other stuff. It's important to be realistic about the costs to replace things these days. I'd over Insure a little but there's no point insuring for $1m when you only need $300k.