Insurance On Strata Title Properties
When a person owns a strata title property, whether it be a unit, apartment or a commercial property, owners need to be aware of just what insurance is taken out by the body corporate.
it has often been found that body corporates will keep renewing the insurance each year, which is increased by CPI, but they do not always get new property valuations and this can leave the property owners in a very tenuous position.
All properties, not only strata title properties, need to be insured for replacement value because that is exactly what you will want in the case of fire or other disaster which makes the property untenable.
When a property is insured for replacement value not only are the costs of today’s materials taken into account but also the demolition and removal costs of material. Costs which can add up to well over $40,000 which are not in the value of the property itself once completed and therefore not recoverable.
Chartered Quantity Surveyor: Insurance Replacement Report
It is the job of a Chartered Quantity Surveyor to calculate these costs for you and strata title property owners should find out if their body corporate has taken steps to get these updated values and that the property is valued at that price.
There have been cases where property owners have been as much as 75% or more out of pocket on a rebuild and that is a lot of money, especially given that insurance is a tax deductible item on an investment property.
Filed Under: Property Investment • Quantity Surveyor
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