House Insurance
Ledd, Daryl & I have been active builders for many years; about 3 years ago we started contracting to IAG which deal with CGU, RACV, SGIO, GIO and a few more that change names between states. We also attend sites for a few loss adjusters and private insurance firms so I will share a little of what I have gleaned over the years from the experience.
1. Most people will insure a property for what they bought it for NOT what it would cost to replace. The bank won't care as long as their risk is covered! We attended a total loss fire in Dimboola (Wimmera Vic) and the couple had insured their house on the river for the price it would sell for; when it burnt down they couldn't afford to rebuild the same country homestead on their land on the river. All they could afford was a small unit or to move into town.
2.Most people don't include the cost of all structural features on a property like fences and sheds (however small); in the event of a fire which destroys all of a house but leaves the other structures intact MOST policies will deduct the value of the replacement of the remaining structures from the payout and give you the balance. This is the single most important reason to correctly value your entire property and the structures that are covered within it. We attended a house fire in Swan Hill a couple of years ago and the couple had a 6 year old house which was totally destroyed by fire, their policy was for 400k but they had a shed with inground pool valued by the bank at over 100k and the most the bank would offer the owners was the total amount insured less the cost of the shed that was undamaged = $300k. Their reason is that you insure the total property and include in your amount the replacement of all structures within it, so if some are left undamaged a claim is paid pro-rata. So be careful.
3. Some insurance policies will deduct the cost of demolition, removal of debris and drafting/permits etc from the total amount insured so read the fine print in your policy and if this is assumed to be included in your insured amount, make sure you add at least another 20-30k on your insured amount to cover the costs (varies with age of house/location/asbestos etc).
4. If you want an idea of how much it will cost to rebuild a house in your area have look at the spec home prices in your paper, it will be close enough. Just check to ensure that any fencing etc is included and some landscaping if it is applicable with your policy.
Yadreamin, a friends father is a valuer and he said that they are only obliged to disclose the value to the person/s who engage and paid for the valution. My bank drove by our place and valued it from the side of the road; I wanted my own idea of the price so I engaged my own valuation to be done (65k more than the banks) and presented it to the bank. The bank manager was suprised and said that if I had the valuers make the valuation out in their name they would take it on board as the official value. Even though I still paid for it that $330 was money well spent, as it enabled me to have a deposit available for another property.
Hope this helps.
