Insurance for Investment property??!!

[blueskymine]

Hi

I find answering the issue in the title field the most annoying so far.

I have to have building & content insurance and landlord insurance.

Issue: Replacement cost
I read on the online literature that in Sydney area, which I like to include Central Coast, an approx $1300 per square metre is reasonable for medium 'look', brick veneer, tiles, built around 1985

I don't have the ave size of the property yet, let's assume for the moment it is of 165 sqm unless someone may tell me differently, ground level, brick veneer, 3 bedrooms (built in), small to medium size, 1 kitchen, 1 dining, 1 lounge, (all small to medium) 1 laundry, 1 bathroom medium, 1 toilet, 1 garage, 1 pergola (awnings), 1 shed - 1 Air con ducted, minimal fencing paving.

If I multiply $1300 x 165 = $214,500 cost of replacement.
1/ Should I add $200 to the sqm for demolition etc... making $247,500?
2/ Why the various online (condells etc) give me between $332,000 and $353,000

I read on the online literature that if the house is 28 years old, the payable by the insurance would be Replacement Value Less Depreciation of 28 years $28000 , so say $353,000 less $28000 = $325,000

3/ Does the lot sound right to you?
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If this works like this, with the various age of contents items, what is the content insured?
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Thank you very much for your help

BSMine

 

[thesuperman]

I would always make sure not to be underinsured for the cost of the building because if the building burns down & you get a payout that doesn't cover the replacement cost, you're in a bit of a problem. I think it's better to be overinsured to cover the replacement cost of the building just incase.

 

[Aaron_C]

The replacement value on the valuation report is a rough guide. For my own house the replacement amount was $500,000. However, I insured it for $600,000 as I know how much it would cost to rebuild this place if it did burn down.

 

[blueskymine]

Thanks to both.

I find the estimations for replacement cost from online tools to be excessive however. I think that $1500 rule of thumb for NSW x house size is reasonable to get peace of mind for medium 'look' house. May be $1600
Online estimations give a $2121 or so square metre cost!

What would be your ave. sqm replacement cost in NSW? for insurance purpose

Thank you

 

[Dazedmw]

I find the estimations for replacement cost from online tools to be excessive however.

I don't know in NSW but in Vic the rate of about $1,300/m2 wouldn't be far from right. Added to this is professional fees, inflation until the end of the policy (12 months), inflation for planning approval/rebuild time, and cost for removal of debris. There might be something else but I can't remember of the top of my head, some policies might include loss of income.

Maybe RightValue can tell us how he calculates the insurance value for residential valuations.

 

[blueskymine]

Let's see if RightValue gives us some tips, but yes, $1300 plus what you mentioned, to be on the safe side. For me, may be $1600, don't know.
Thanks very much for Dazedmw, you're telling me I am on the right path.

That simplifies a lot insurance calculations.

Now I need to figure out if Terri Scheer will be right in terms of conditions and premiums for residential Bld LL insurance. I found hard to compare insurances like everybody I assume, at the end, even when I put them on paper to compare, it is about guts feeling, and it goes like the Millionaire HotSeat: lock in A until the last second!

Have to ring them to check on discount on the above combined with LL insurance.

Ah..... it's Saturday soon

 

[Dazedmw]

Let's see if RightValue gives us some tips, but yes, $1300 plus what you mentioned, to be on the safe side. For me, may be $1600, don't know.
Thanks very much for Dazedmw, you're telling me I am on the right path.

I meant to say, I always had it in my head (as a rule of thumb) that the "extras" were 25% to 30% on top of the build figure. So the $2200 a square metre you mentioned in the opening post does seem high.

The only other thing I can add is that I have had $1300 a square metre in my head for a couple of years now, so maybe I has increased a bit since I last really thought about it.

 

[blueskymine]

I meant to say, I always had it in my head (as a rule of thumb) that the "extras" were 25% to 30% on top of the build figure. So the $2200 a square metre you mentioned in the opening post does seem high.

Hi Dazedmw, no, the $2200 sqm mentioned is high indeed, it is what you get if you use online tools for replacement value, my property replacement value according to them will give that excessive amount, while I think like you that the ave is $1300 and to this an extras to cover side costs is rule of thumb

I read the ave is $1200 - $1500 and some std deviation...