Home Insurance Replacement Value
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Homeowners Insurance Replacement Value
A professional Home Insurance valuation or Home Valuation for Insurance Purposes is the best way to safeguard the value of your assets. An independent Home Insurance Replacement Value Assessment gives homeowners the peace of mind that in the unlikely event of loss or damage, their property will be fully covered.
The Australian Securities and Investment Commission report “Getting Home Insurance Right” found that …
The level of underinsurance in Australia is high. In the aftermath of the 2003 Canberra bushfires, the Insurance Disaster Response Organisation reported that of the homes destroyed in the ACT bushfires, on average homeowners were underinsured by 40% of the replacement cost.
The report also found significant inconsistencies in the figures generated by home insurance calculators. The largest gap between the lowest and highest estimates was 169%, the highest estimate was more than two and a half times the lowest estimate for the same house in the same location.
How safe is your current level of home insurance cover?
Did you know the cost of building a new home has increased four-fold over the past 20 years?
If there’s a significant time gap since your last property Insurance valuation it would be a wise move to get a new building insurance valuation.
The replacement value of home excludes the land value of your property. But other costs are often overlooked such as demolition works, professional fees and escalation, which can lead to being underinsured. If you are underinsured, you will be liable for a portion of the replacement cost yourself.
Conversely, if you’re over-insured you’ll pay unnecessary insurance fees and costs.
A common mistake people make is to equate rebuilding costs with the market value of a property, or what they paid for it. For example, a 1930s heritage house might sell for $300,000, it could cost $800,000 to reconstruct it to the same quality and specifications. With other properties, the reverse is true – the market value can be far above the rebuilding cost.
Choice Property Valuation has highly trained property valuers with the technical knowledge, skills and experience to provide expert advice in all areas of the property. We are certified property valuers with membership at the Australian Valuers Institute. Because we live and work in Sydney we know the building construction cost’s of its various suburbs. We have experience in all building types along with forecasting the estimated time frame associated with redesign and construction.
Why engage a Professional Insurance Valuer for your home?
The rebuild value for your home provides a solid basis for the declared insurance values. In the event of a claim having a professional insurance valuation can greatly simplify and streamline the claim process. This can help prevent ensuing investigations by the insurer that can lead to a protracted claims process and delayed settlements which can take months or even years.
Insurance policies in Australia also place the burden of estimating rebuilding costs on the policyholder and it’s the policyholder that faces the financial consequences of under-insurance in the event of a total loss. Despite the perception of homeowners who use the insurer’s ‘Home Building Calculator’ the estimates are NOT approved or endorsed by the insurer, check the insurer’s disclaimers.
Choice property valuation provides home Insurance valuation reports. The industry is ever-changing so you need an expert in this field, factors like new legislation, fire regulations, heritage-listed materials, fire combustible and toxic materials add to the complexity of the valuation process. We provide insurance valuations for all types of properties including homes, duplex buildings, villas and townhouses.
What are the benefits of having a professional valuation?
- Save by not paying excessive premiums due to over insurance
- In the vent of a claim, avoid the financial consequences of underinsurance
- Fast-tracked claims process without disputes around the insured values
- Minimised interruption to business operations
Home insurance calculators are free!
Why do I need a Valuer?
It is estimated by the Insurance Council of Australia that 80% of property owners are under Insured. In many cases, people do not fully understand the risks that underinsurance represents. Can you rely on a Home Insurance calculator to accurately estimate the rebuilding costs of your home? If you get it wrong, you could find yourself underinsured and out of pocket.
Six different online Home Insurance Calculators and six different Results
Choice Magazine, tested six different online building insurance calculators to get the rebuilding cost for a four-bedroom home and found the results varied by as much as 18.7% between different insurance companies for the same size house in the same suburb location.
Why do home rebuilding costs vary so much?
Online building insurance calculators often fall short because they lack the specific details needed to conduct a proper building Insurance valuation. Some building insurance calculators don’t include demolition and architect fees. Other factors they can’t assess properly include
Property Location – Site Access
Different locations can create huge variations in the cost of rebuilding a home. For example, the GIO home insurance calculator used to assess a four-bedroom home in Leanyer NT 0812 came to $841,067 whereas for Mosman NSW 2088 it came to $380,942 less than half. This is probably due to Darwin, being a relatively remote area, as you may need to fly in skilled labour and transport materials, so things likely cost a lot more there. Most Home insurance calculators only allow you to enter your property’s postcode. However, construction rates can vary significantly within the same postcode.
Bushfire Zoned Areas
The proximity of your home to a bushland area can significantly affect the cost of reconstruction.
The style of construction needs to comply with building standards and council regulations for bush fire zoned areas. As an example, a Central Coast project home build in the 1980s located more than 100 metres from bushland using an insurance calculator cost $430,432 whereas the same home located less than 15 metres would cost $588,121. That a 36% difference
The slope of your Land
A slope of more than two metres increases the construction costs required to design and build your home. The degree and direction of the slope are also important. A block of land that rises above the roadway will cost more to build. As the upslope land requires more cut and fill than land that is lower than the roadway. The slope of the land affects the following factors … architect fees, site access, additional labour, earthworks, drainage & sewerage considerations, retaining walls and foundation design.
Age of Home – Style of Construction
The style of home construction has changed over the years. Homes that reach a specific age may obtain historical significance, and become heritage-listed. Reconstruction of a federation home is often affected by council planning regulations that require you to rebuild in a similar style and with similar materials, this can be very expensive. And you also have to comply with current building standards, energy efficiency etc.
Alternatively, modern home styles can range from low-cost project homes to modern high cost architecturally designed homes. Interestingly, the cost of building a new home has increased four-fold over the past 20 years.
Standards of Construction
The standard of construction is a subjective judgement call based on experience that takes into consideration the architectural and design features of the house, the workmanship, quality and type of materials used to complete your home. These factors all combine to allow a valuer to properly arrive at a fair per square metre rate of construction. Bathroom and kitchen areas cost more than lounge and bedroom areas, with online calculators, often you can’t enter the square meterage of a room or number of rooms
Warning – Online Home Insurance Calculators
All the building insurance calculators come with a warning that it’s an approximate guide only and that no responsibility is accepted for their accuracy. They ask users to check with professionals such as architects, property valuers or builders for accurate estimates.
Home Valuation for Insurance Purposes
Mount Riverview NSW 2774
Built Circa 1975 – Residential Home – four bedrooms, two with built-in cupboards, bedroom one has a walk-in robe & ensuite bathroom. Plus kitchen, family room, balcony, TV room, 2 x bathrooms, laundry and a three-car garage.
Home Insurance Rebuild Cost Assessment
Paddington NSW 2021
Built Circa 1840 to 1890 – Two Storey Brick Terrace House – owner wanted updated building insurance valuation following completion of renovations.
How much does a Replacement Insurance Valuation cost?
The valuer undertakes an inspection of your property and checks building plans, dimension, architectural features and level of finishes. The valuer provides a valuation report; the assessment also takes into consideration site access, council regulations, heritage listing etc.
Fees and Quotes
We prefer to quote each job individually to provide the most competitive price for each job.
As no two properties are the same … fees typically range from $450 to $650
- Send us the address and we’ll provide you with a competitive quote price.
- We are happy to quote on jobs to keep the competition honest.
It is false economy to try to save a few hundred dollars on professional fees if in so doing you put at risk hundreds of thousands or possibly millions of dollars’ worth of property.
What is a Home Insurance Valuation Report?
A home insurance valuation report includes a detailed description of your property, colour photographs and summary of the costs that make up the valuation. It’s an estimate of the actual cost to rebuild your home at the time of the valuation, assuming a total loss situation and a reinstatement with a new building(s) of similar size and materials.
A Home Insurance Valuation Report includes an …
- Estimated of the current construction costs to construct a similar building (Rawlinsons Construction Cost Guide)
- Allowance for cost escalation during the insured period and rebuilding process.
- Cost of demolition and site clean-up,
- Professional fees, town planers, architects, engineers and
- Council fees and other costs depending on the type of property.
The sum insured include all costs that would be included in replacing the building.
Common exclusions from insurance replacement valuation report are:
- Tenants’ property
- Loose furniture and equipment
- Temporary accommodation
- Loss of revenue
- Finance costs
Insurance Reinstatement Valuation
Victoria Road, Gladesville NSW 2111
Built circa 1850 – two semi-detached ‘Georgian style’ sandstone block cottages with open parking. The building sum insured was split for the clients
- 1a Victoria Rd – $430,000
- 1b Victoria Rd – $580,000
