Insurance Replacement Valuations
Sovereign Valuations is experienced in undertaking property valuations for insurance replacement purposes. An accurate insurance replacement valuation is imperative to ensuring your investment is adequately insured should a disaster strike. It is important to note that construction costs within many markets have increased significantly throughout the Covid-19 pandemic due to many reasons including:
Impacted global supply chains leading to increased cost of building materials
Labour shortages
Increase in the number of infrastructure projects
An insurance replacement valuation estimates the replacement cost of the property. The replacement cost is the estimated total cost, at the date of valuation, to reconstruct the property to a condition equal to, but not better or more extensive than its condition when new. The property is assumed to be reconstructed to a modern equivalent ‘as new’ including any allowances for removal of any remains and debris, professional fees, upgrading with modern equivalent materials, equipment and services to meet current building regulations in accordance with the building code of Australia and to the local council regulations. It is an estimate of probable cost to replace the built structures and external improvements made to land, wholly contained within the boundaries.
The replacement cost estimate considers the following costs:
Demolition and removal of debris
Building cost
Landscaping and site works
Professional fees
GST
Escalation of building costs during demolition, design and tender process
Escalation over insurance period for 12 months
Contingency
Sovereign Valuations uses the most up to date price indicators published by Rawlinson’s Australian Construction Handbook. Further to this, Sovereign Valuations has extensive experience vetting building contracts for various residential and commercial development projects, providing further valuable insight into market construction costs.