So it just occurred to me while filling out a quote for insurance for a IP that will be rented out in Dec, that I don't know what the replacement value of the building is. Now I would be curious to know how other people have worked this out on their IP? Any thoughts?
I usually just ask the insurer for their estimate - if it falls broadly in line with my thoughts then I go for it. Cheers Jamie
some insurer allow you to adjust a very lower value hence your premium is lower. NRMA has quiet a high minimum you can go to, whereas Youi/Comsec allows to go quiet low.
Just remember the risks of underinsuring, ie replacement value $200,000 you insure for $100,000 make claim for $50,000 damage they pay $25,000 as you underinsured. If you have several properties under common ownership you might be able to insure them under one policy with a saving. NAB was offering good rates a couple of months ago - from memory no flood coverage - but if we got flooding where we are, it would be a major national disaster which would end up affecting three states.
really? not sure myself. I was under the impression that if the house is burnt down, they pay you what is you insured, in this case 100k. However if say mother nature did 25k damage, they will repair 25k damage.
It's pretty general https://www.moneysmart.gov.au/insurance/home-and-contents-insurance/risk-of-underinsurance It's easy to underestimate the cost of rebuilding. Last year I insured a number of buildings on one site for about $13 million. I've been involved in buildings in that industry for several years as has my then boss. We thought this was fair. An estimator came around and based on current building costs considered $16 million was closer to replacement value. A few months later we were looking at replacing one building and thought based on area it would cost $2 million. We had a guy in the building industry come round. He said $4 million because of what would be needed for the foundations on that site.
