Time to review that insuarance policy
What a start to the year? Floods, cyclones and ravishing bush fires. Australia has come under attack from Mother Nature this year. And with most experts warning that extreme weather conditions are only likely to get more frequent (and severe) it's time to take a close look at your property's insuarance policy and make sure you're adequately covered, or be more informed about the risks you're taking if you choose to under insure.
As many people are only now just realising, the onus for estimating the cost to re-build your home for insurance purposes In AUsralia is on you, the consumer. And this has led to many Australians unintentially underinsuring their homes.
Many insurers offer tools such as web calculators to help consumers estimate the cost of rebuilding, but as professionals working in cost planning and quantity surveting we know that working out an accurate cost is complex and requires technical knowledge.
A common mistake that homeowners make is subtracting the value of the land from what you would get if you sold your home today. If your rates notice says your land is worth $250,000 and you purchased the property for $400,000. You can pretty much guarantee that the cost to build a new home will be more than $150,000.
To estimate the real cost of rebuilding your property, take into account:
- demolition costs
- redesign fees and costs. You probably won't want to rebuild a replica of the old house and new design changes will have costs and fees associated with them.
- construction costs - there is a chance that construction costs will escalate during the construcation period so its important to factor in some extra cash here
- property access and materials transportation.
- new fire code and energy efficiency standards. You will need to bring your new property up to present day building code so this can add cost to construction.
- renovation costs. If you've added a new kitchen then make sure you're insurance policy reflects it and not the one you just demolished.
ASIC reccommend that even if you think you have enough insurance you should check your level of cover to ensure that you will not be left short should disaster strikes. This is particulary important if you haven't increased your coverage for a number of years.
Any questions about insurance, feel free to contact us.