Manuscript: Building Insurance: Your Guide
Synopsis-Long Form 23062024
Opting for the Minimum Replacement Value insurance coverage can result in inadequate or non-existent cover for Architect Fees and Charges and Debris Removal costs due to the potential exhaustion or underfunding of the BSI Value and will not provide for any escalation in building costs and very limited or zero accommodation expenses necessary after an Event.
Should "total loss" be declared, no additional benefits besides the Building Sum Insured Value are paid.
Insurance providers limit their liability to incurred costs, as allowed by laws.
There is a variation among policies concerning the provision and execution of supplementary costs, such as for temporary accommodation expenses in strata insurance policies and a safeguard system with non-strata home insurance policies.
For low-rise buildings, I present an appropriate method for determining the BSI Value in the event of destruction, catastrophe, total loss, or constructive total loss which incorporates an escalation factor for building costs and an escalation period of 104 weeks for accommodation expenses.
I present a unique BSI Value formulation for high-rise buildings that incorporates rental values and extends the escalation period to at least 208 weeks for accommodation expenses. It addresses local council planning requirements for compliance with contemporary building codes, leading to an elevated supercharged BSI Value.
This method facilitates a fair and more precise evaluation of proportional disbursement for repair and maintenance expenses among the diverse space components of the building.
It is important to note that the Policy Wording/Product Disclosure Statement always supersedes the Schedule Values. To reduce such inconveniences, it would be beneficial to implement a legally established and structured insurance agreement, backed by the comprehensiveness of the Building Insurance Valuation Report, for both strata and non-strata.
This would enable differentiation between BSI Values for minimum and full expenses. If the estimated full expenses valuation is selected, additional costs value should be separable, when needed, from the insured value of the BSI Value, provided that legislative amendments are made to allow this to happen.
To avoid confusion with complex provisions, I propose a solution that clarifies these points in the strata or community common interest typology or the general home building insurance contract. The suggested method includes increasing the base property minimum replacement value by a fixed 15%. In case of rent loss, this change can help cover expenses or provide temporary accommodation for 104 weeks after the Event. If you prefer, it is highly recommended to increase the minimum replacement value by an extra 15% to account for higher building costs after an Event, as they may be affected by socio-economic conditions following an Event.
This theory is advanced in Molly's loss story, presented in Chapter 2. By increasing the minimum replacement value by 30%, you, as the policyholder, can achieve greater autonomy over your future and eliminate reliance on the discriminatory language and volatile conditional insurance policy terms for covering replacement and additional expenses for the period deemed appropriate.
Governments cannot reasonably propose that individuals insure for Full Costs when the excess or residue value cannot be distinguished and paid out as full insured value when immediately necessary. This makes insurance policies of whatever persuasion grossly unfair. If the proposed legislative modifications are not implemented, the consumer/insured will not achieve justice. This publication contributes to the progression of this matter.
