An insurance policy is a mechanism to protect the things we value, that can vary from a unit to a vehicle.
Determining the replacement value of a building or a item can vary on its type and construction.
Strata title insurance it designed to protect the owner and the strata assets, and the premium is shared amongst the lot owners as a component of their strata fees.
Holding strata insurance is mandatory for strata schemes around Australia. Some strata schemes are under insured and it is best practice to obtain a independent insurance valuation once every five years, to determine if the building is adequately covered to be replaced, in case of a event.
The reinstatement cost is where a property is lost or destroyed in a event of fire or extreme event. Where the property is to be replaced of the condition that was equal to than its condition when originally constructed.
Improvements to be building should be made known to the strata manager, so they can be included in the replacement insurance valuation.
The strata scheme valuation only includes the fixtures and fittings in the building, such as kitchens,walls and appliances. Internal contents of the building is not included in the insurance cover.
There was one building we used as a case study, where the building experienced a fire, it was 2 commercial units.
The site was fenced off and it sat idle for twelve months, Then the rubble was removed after 14 months and then the site was bare for another six months. Then often 18 months after the event, building finally was started. Then the building was completed 26 months after the initial event.
This is where the loss of rent is part of the insurance policy, to cover costs of alternative premises until the building is rebuilt.
There is also an issue with asbestos that can impact your insurance policy Where there was a building that has an asbestos roof and the insurance cover would not be reinstated untill the roof was replaced with metal sheeting.
The recent bush fires and cyclones hi light the importance of insurance for building, plant and equipment.
Queensland Cost of damage for cyclone Ida in 2014 was $8,400,000 Cyclone Marcia in 2015 cost has reached $50,000,000 New south wales bush fires for 2013 was $183,400,000 Perth bush fires for 2014 was $15,000,000 Northern territory cyclone Tracy, in current costs would be 2 to 3 billion dollars.
There was a report that was released from the bureau do transport economics, that was titled the economic costs of natural disasters in Australia
The risk of natural disasters form the backdrop of our everyday lives, we can use insurance as risk management in the reduction of the impact on operations in a normal manner.