News

Does your Sum Insured take account of current building standards?

News >>

An issue is developing as insurers are handling claims arising out of the fires in the Blue Mountains, west of Sydney, in October 2013. Over 200 houses were lost in these fires, and the total insurance cost is estimated to be over $183 million.

As property owners and their insurers are starting to consider rebuilding, they are faced with increased building standards that have been introduced in the past 4 years. The building standards apply to new buildings (which includes the rebuilding of residences lost in the fires) and major renovations/repairs in areas that may be affected by fire, and operate to increase the cost of rebuilding. This has led to a number of properties being underinsured in the Blue Mountains area.

Other parts of Australia are also faced with building standards that have been changing over time, including areas likely to be affected by major storms and cyclones.

It is critical that when insurance brokers are discussing the sum insured with their clients, and in particular when the cost of replacement is being estimated, brokers take careful account of current building standards that may be applicable to the property. Knowledge of local requirements will be critical in this regard, as the building standards are mostly applied and enforced by local councils.

Care should also be taken with sum insured calculators on insurance web sites, to ensure the calculators also take full account of the cost of rebuilding, taking account of current building standards and codes.

If you have any further queries about this topic, please don't hesitate to contact me directly.

Last changed: Jan 10 2014 at 1:47 PM

Comments

  1. None Found

Add Comment

Latest News

Illegal or unsuitable cladding now a big issue

Why we have laws, regulations and Australian standards? Because some people just do the wrong thing all for the sake of making money. The cladding issue is the subject of 4 Corners program on the ABC.

We are already seeing Insurance policies now placing exclusion endorsements into their policies excluding and claims relating to illegal cladding. We are seeing Governments demanding Audits of all existing buildings above a certain height. There are accusations of Builders taking other short cuts such as on Wiring, Pipes and sprinkler systems. 

The question is, who is to blame? Who will take responsibility?

read more

Small business in NSW

Right after the NSW Government have reimposed Fire Service Levies, they have at least made an effort for small business. The government has announced it will abolish stamp duty on a number of policies taken out by a small business. This is an important change.

What is a small business? In order to gain the exemptions, the business must be a small business for Capital Gains Tax Purposes for the income year in which the insurance is effected or renewed. A small business for CGT purposes is: “an individual, partnership, company or trust that is carrying on a business, and has an aggregated turnover of less than $2 million.”

read more