Why do I need a replacement cost estimate?

 

Replacement cost estimates will identify your full costs in the event of partial or total loss to your property, whether it be by fire, flood or some other natural disaster. These estimates are required for insurance purposes and may be necessary when insurance is being taken out or when a disaster has occurred.

A replacement cost estimate ensures that you have adequate insurance coverage for your property.

 

What items are included in a replacement cost estimate?

 

A replacement cost estimate typically covers the following components:

• The demolition and removal of debris and asbestos of the original structure, including all associated consultant fees;
• The cost of reconstructing a new building considering and revised or amended planning constraints and updated building codes;
• All consultant fees and preliminaries;
• Cost Escalations for time taken to complete assessment, design, tender evaluations, construction periods and new policy renewal dates.

 

Who needs a replacement cost estimate?

 

If you are an owner, landlord or developer of a commercial, industrial, or retail property, you need to obtain a replacement cost estimate report.

Owners of residential properties, including apartment blocks/strata titles and bespoke/architecturally designed houses, may also need to obtain a replacement cost estimate.

Important Note: It is NSW policy that ‘The Owners Corporation’ has a duty to cover all buildings in the Strata Scheme under a Damage policy with an approved insurer.  NSW policy notes that a valuation of the building replacement cost must be carried out by a qualified Quantity Surveyor or valuer, at least once every 5 years and increased to reflect the new valuation amount. 

The only exception to this is that the building cover requirement doesn't apply to 2-lot schemes (referred to as small schemes). This relates to buildings that are detached and no building or part of the building in the Strata Scheme is situated outside those lots.  However, the two owners must decide by unanimous resolution that the Owners Corporation will NOT be taking out building insurance.

 

Why do Quantity Surveyors provide replacement cost estimates?

 

MCG Quantity Surveyors are experts in construction costs. This expertise allows us to be recognised as the most suitably qualified professionals to advise the insurable value of a property. Leveraging an extensive database of construction costs, we can provide property owners with an accurate insurance amount in the form of a replacement cost estimate.

Being independent and impartial to all parties, we can provide a trusted and experienced assessment to protect the property from being over or underinsured.

Is a replacement cost estimate the same as an insurance valuation report?

 

Yes. Both terms relate to a report that has the same purpose. Replacement cost estimates can be referenced differently across different industries; some of these include:

• Replacement Cost Estimate/Report
• Insurance Replacement Valuation
• Insurance Replacement Cost Reports
• Replacement Cost New Assessment

 

What will be provided in my replacement cost estimate report?

 

The replacement cost estimate report will include:

• reference to the property address as listed in the Registered Plan
• a description of the building structure, services and finishings
• works external to the building in accordance with the insurance policy
• building areas
• summary of costs

 

How much does a replacement cost estimate cost?

 

MCG offer a base rate of $600+GST for any property type (Domestic, Commercial, Industrial, Rural etc.) that falls into the following category :

• Architectural Floor Plans are available (scaled drawings).
• The current sum insured amount does not exceed $10m.
• Non remote areas.

 

How long will it take to get my report?

 

As we are a national company, we can get properties within Australia inspected and the report prepared within 7-10 business days.

 

How often should I update my replacement cost estimate/sum insured?

 

After the initial report, it is standard to update that cost each year, applying a percentage for escalation. It is unnecessary to prepare a full replacement cost report every year replacement every year however, a full review should be undertaken at least every 3 years, with no longer than 5 years between updates.

We would also recommend a full review be completed following any major renovations or upgrades.