Strata Report states that building is under-insured

[Jaz]

Hi all,

I'm looking at a strata report which states: "We note the building is under insured according to the above valuation."

However, the building is insured for the exact amount listed in the building valuation (building replacement cost).

Why would this be considered under-insured? Should the building be insured for more than the replacement cost?

Cheers,

Jaz

 

[Colin Rice]

Could be factoring inflation into the equation therefore if the building was destroyed and needed to be replaced the current insurance may not cover the replacement costs by the time it is completed. Call whoever prepared the report and ask them for clarity?

 

[AlmostBob]

4 000 000 Building assessed value
4 000 000 Building insured value
4 000 000 destroyed by fire payout

1 000 000 site clearance
0 100 000 survey & compliance costs
4 000 000 construction

5 100 000

1 100 000 under insured

rebuild costs are more than build costs,, some links racv
was going to post a bunch of links, but they all go to the cordell site with different color profiles, so one will do
and this is a build cost estimate

 

[Jaz]

Could be factoring inflation into the equation therefore if the building was destroyed and needed to be replaced the current insurance may not cover the replacement costs by the time it is completed. Call whoever prepared the report and ask them for clarity?

Yeah, I was thinking that. Insurance is due for renewal in October. I'll call the company that prepared the report.

The lender needs to sight the body corporate insurance and strata plan prior to settlement. Any idea how closely they look at the policy (bearing in mind it appears that the building is insured correctly for the replacement cost)? Don't fancy losing our deposit if the loan was cancelled at the last minute.

Cheers,

Jaz

 

[Colin Rice]

The lender needs to sight the body corporate insurance and strata plan prior to settlement. Any idea how closely they look at the policy (bearing in mind it appears that the building is insured correctly for the replacement cost)? Don't fancy losing our deposit if the loan was cancelled at the last minute.az

My guess is that it would slip through if it is equal. Lenders will advise what the minimum insurance figure is if you ask?