Building and Landlord Insurance

Just wondering how people ascertain what amount to insure the house for. The suggested amounts vary greatly and I am finding it hard to settle on a figure. My solicitor has recommended the sale price minus the unimproved capital value which in my case would be $230k - $175K = $55K which for my mind seems greatly under insured. Any advice is greatly appreciated.

 

All valid points.
Maybe work off a sqm build cost....

Also keep in mind the bank may require you to have a minimum replacement value on the certificate of currently supplied to them..

 

Can you replace the house for $55k?

On one property the insurance company recommended an amount, on others I can't remember. One company had ranges ie. $200k-300k was the same price so I went for the higher figure.

 

I usually choose for an amount that'd cover like for like replacement.

Eg if its a 3 bed 1 bath single storey home and the worst case scenario happened (ie burnt down) I'd need insurance money to pay for site clearing and construction of a 3 bed 1 bath single storey home to be built.

 

Mines covered for an amount where I wouldnt mind if it burnt down..

 

Be careful what you write online

 

You have to decide, if the place is a total write off, do you want to be able put a rentable residence back on the block ? or would it be doing you a favor as you intend to develop ?

If you look at new estates, not hard to work out build costs, or just call one of the project places and price a simple place you find acceptable.

It also will depend on where and how much demand for land.

On some you can afford to have far less building insurance, and others need to be covered, I know plenty that had no insurance, but the empty land was worth a lot. Your lender may also dictate what you should have & you do not want to be left with a large mortgage with block that can't easily cover if your under insured (under really would seem to me to be similar to none).

 

A new project home is about 180K add demolition 20K site costs 25K legals 10K basix 15K plus add 10 % buffer = 275K.

Premium is only 850 pa includes land lord insurance.

The Druitt is the cheap end of town.

Not sure what happens to tenant as they are month to month. Maybe just give them a couple gran and tell them to find another place.

 

Thank you for that Greyghost

 

No Chance re the $55K That's why it did not sit well with me. I can't see anything being built for less than $250K and that would be very basic. Thank you for your input.

 

Sounds very logical. Might try that.

 

Thanks heaps Dabbler.

 

Great info, thank you

 

Hi Datto,

Can I ask who you have the insurance through?

Mick

 

Insurance companies have calculators online which estimates the replacement cost. For a 3br house it seems to be around 250-300k.