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Most readers here will know the Owners Corporation is required to have the building valued for Insurance at least once every 5 years in NSW.
At the last AGM Owners voted for a new valuation.
Later , with no notice given nor permission sought of Owners nor even of Executive Committee members , our Strata Manager disclosed the amount of money the building was insured for to the new chosen Valuer.
This is ridiculous , because Valuer can then use that amount and simply increase it by some amount they think relevant and present that as current value , without having done a thorough assessment to determine true value.
We could have simply left the standard + 5% per annum increase for the current year’s Insurance renewal that the Insurance Broker had applied.
After complaint to Strata Manager he informed us that this is Standard Procedure – disclosing the current Insured Value to Valuers – and he and the Management Company will not accept liability for acting contrary to the interests of the Owners Corporation.
He said all Insurance Valuers request that information , but so far as we know the Valuer did not request it but was simply given it at the time they were engaged to do the valuation.
What use is a Valuation that is an estimate based on a a previous value that is simply an accumulation of + 5% every year , and that since apparently a similar estimate done previously ?
Actual increases of costs of materials and construction do not average out at 5% per annum , thus our building could be substantially over-insured or under-insured by now after years of the above , and I’ll guess at under-insured.
Please , any readers here with knowledge and/or experience of building insurance , is this statement by Strata Manager of “Standard Procedure” actually correct for NSW ?
… and , are there any Valuers in Sydney who will take on a Residential Strata request and do a thorough assessment of the true value with regard to replacement costs based on current market prices , and who do not cheat by using some-one else’s guesstimated value ?
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I don’t know anything about ‘standard practice’ etc. What I can say is that when we get our 5 yearly valuation the valuer doesn’t ask for and is not given anything except access to one of the units.
We are a small self managed Strata.
Hello MyAimIsTrue,
Insurance Valuations are approached differently by different professionals. Personally, I measure all buildings and cross check against the areas denoted on the Strata Plan. Areas such as foyers, stairs, plant rooms, driveways, gardens and grassed areas are not usually denoted on the plan and they therefore need to be physically measured to be accurately calculated. I then use current building and construction costs and time frames to determine the recommended sum insured. Information is obtained over time from various sources.
Furthermore, it is not uncommon for some strata managers to provide the current sum insured. It is important however, as you have noted, that the assessment be done independently and simply adding a fixed percentage increase to that figure is not how the valuation should be arrived at. If there is a large discrepancy between the current insurance amount/previous valuation and the current valuation, then it does not hurt to have a conversation with the current valuer to determine where the difference might be.
I have seen many instances of buildings being seriously under insured and also cases of over insurance.
Hope this helps.
LGA.
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