• Skip to primary navigation
  • Skip to main content
BB_logo

Sydney/National

1300 769 455

Sunshine Coast

07 5449 9115

Menu
  • About Us
    • News
    • Claims
    • Code of Practice
    • Complaints
    • Financial Service Guide
    • Privacy Policy
    • Steadfast Group
    • Testimonials
  • Commercial Insurance
    • Business Insurance
    • Bush Regenerators & Landscapers
    • Cyber Insurance
    • Insurance for Architects & Engineers
    • Public Liability Insurance
    • NSW Stamp Duty Exemption
  • Builders, Trades & Owner Builders
        • Licensed Builders
          • HBCF Builders Warranty Update 24New
          • Build to Rent InsuranceNew
          • Brand New Vacant Home For Sale
          • Builders Warranty Insurance
          • HBCF Builder Self Service Portal (BSSP)
          • Contract Works and Liability
          • Cyber Insurance
          • Display Home Insurance
          • NSW Stamp Duty Exemption
          • Professional Indemnity for Licensed Builders
          • Sickness & Accident Insurance
          • Tools of Trade Insurance
        • Tradesmans Insurance
          • Cyber Insurance
          • Tradesman Liability
          • Tools of Trade Insurance
          • Sickness & Accident Insurance
          • NSW Stamp Duty Exemption
        • Owner Builder Insurance
          • Owner Builder Construction & Liability
          • NSW – Owner Builder Warranty
          • Voluntary Workers Insurance
  • Personal & Domestic Insurance
    • Build to Rent InsuranceNew
    • Brand New Vacant Home For Sale
    • Display Home Insurance
    • Sum Insured Calculators
    • Building Valuations for Strata Owners
  • Payments
  • Contact

The Importance of an Independent Initial Valuation

Getting the initial insurance replacement value for a property right is more important than you may realise.

It ensures insurance cover for that policy period is adequate in the event of a claim.

By establishing an accurate starting point, it significantly increases the odds of future insured amounts also being appropriate.

Fit for intended purpose

Although always a valuable starting point, the original construction cost may not accurately reflect the cost to reconstruct your development during the insured period.

It seems logical that the person who built the development and knows its original construction cost will be best placed to set its initial insured value. Surprisingly, this may not be the case.

  • If the building had an extended construction period the original construction cost will already be out of date.
  • If the building was constructed by a large developer or as part of a larger development, there may have been economy of scale savings that will not be available in a one-off reconstruction project.
  • Construction project costs are not compiled with a view to complying with insurance policy and strata legislation requirements:
    • they may include expensive site works (such as bulk cut and fill) that will not be required for reconstruction of the building,
    • they don.t include allowance for insurance components such as demolition and inflation increases during the future reconstruction contract, and
    • they are likely to include items such as carpet flooring that will be covered by contents insurance.

The Chinese whisper effect

Original construction costs obtained by word of-mouth are particularly unreliable as you don.t know which of these cost components, or other development costs such as finance and marketing fees, may have been included. In some cases the cost provided may even be intentionally misleading.*

The bottom line

The original construction cost is useful and should be provided to the person preparing your replacement building insurance valuation . but it should not replace an independent valuation, professionally prepared specifically for insurance purposes.

Author:
KAYLENE ARKCOLL
QUANTITY SURVEYOR & SPECIALIST TAX AGENT

Previous Post: « Owner Builder Warranty Is No Longer Available in NSW
Next Post: Insuring for a disaster in your small business »
Specialist-Brokerage-of-the-Year-white
Steadfast-Logo-white-250
Sydney/National

1300 769 455

Sunshine Coast

07 5449 9115

Email

builder@buildersbroker.com.au

Address

500 Forest Road, Penshurst, NSW 2222

Pay your Invoice online

We now accept Visa, MasterCard and Amex online

visa-mastercard-amex
Online Payments

Insurance Services

  • Brand New Vacant Home For Sale
  • Builders Warranty Insurance
  • Business Insurance
  • Bush Regenerators & Landscapers
  • Contract Works and Liability
  • Cyber Insurance
  • Display Home Insurance
  • Licensed Builders
  • NSW – Owner Builder Warranty
  • NSW Stamp Duty Exemption
  • Owner Builder Construction & Liability
  • Owner Builder Insurance
  • Personal & Domestic Insurance
  • Professional Indemnity for Licensed Builders
  • Public Liability Insurance
  • Sickness & Accident Insurance
  • Tools of Trade Insurance
  • Tradesman Liability
  • Tradesmans Insurance
  • Voluntary Workers Insurance

Don Hutton Insurance Brokers Pty Ltd T/as The Builders Insurance Broker. AFSL 230650 | ABN 37 003 084 384

Copyright © 2025· The Builders Insurance Broker. Website by Bark Productions