I love a good pub trivia quiz. A few guesses, a few beers, and a catch up with mates.
Unfortunately some people apply the same method to working out their property insurance.
A bit of a guess, maybe some tips from a valuer, and possibly even an online calculator.
The truth is, there’s a bit more to it than that, if you want to get it right.
There’s a myriad of options out there and sometimes too much information can seem overwhelming. Don’t let your confusion or lack of knowledge cause you to procrastinate on your property insurance. It can be costly, and in some cases, downright devastating.
Imagine trying to buy a house and working out the market value by adding the construction cost to the land value. In the current market especially, if only that were true.
You likely know that market value is a function of supply and demand and that you need to use comparable sales evidence and seek the advice of a qualified valuer for an accurate assessment.
But did you know, if you’re looking to insure your home and other improvements, it’s not just the purchase price you’re looking at? You need to understand exactly what it’s going to cost to reinstate your property in the event it is damaged. Relying on advice from any source other than a qualified quantity surveyor could provide you with inaccurate information, compounding the disaster that took out your holding in the first place.
While valuers might provide insurance assessments to financiers, this construction cost estimate is typically derived by applying an estimated rate-per-square-metre-of-living-area amount, and then adding an arbitrary premium to cover the additional costs.
This figure can be even more inaccurate if you use one of those online calculators that pop up when search in Google. I cannot stress enough how desperately wrong these can be, as they rely on averages and estimates that can’t possibly be captured via the owner’s best guesses and the click of a button.
The risk of an inaccurate insurance assessment is clear.
At best, you are paying additional premiums to your insurance company to cover an outrageously high amount which is way more than you will ever need.
At worst, you’ll be woefully under insured and, in the event disaster strikes, you’ll find yourself having to cover the shortfall out of your own pocket.
There is only one profession with the skillset to get this important figure correct.
Quantity Surveyors have the experience and knowledge to determine the correct amount you need to insure your property, to give you peace of mind.
We at MCG are passionate about providing property owners and insurance brokers with access to better information, so that you can make more informed choices.