What is an insurance replacement cost valuation?
An insurance replacement cost valuation estimates the cost of reinstating the buildings and other improvements included in the agreed brief. Owners, strata managers and commercial property managers use the report to inform discussions about the building sum insured.
The assessment concerns rebuilding costs. A property's sale price, land value or mortgage valuation answers a different question and should not be used interchangeably with a replacement cost estimate.
Confirm what the rebuilding estimate includes
The required scope depends on the property and insurance instructions. It may include:
- Reconstruction of the buildings and specified external improvements.
- Demolition, removal of debris and site access considerations.
- Relevant professional and approval costs.
- Allowances for the stated rebuilding period and cost escalation.
- Clear treatment of taxes, contingencies and exclusions.
For strata or mixed-use property, identify common areas, shared services and the boundaries of the insured property. Items such as contents, rent loss or temporary accommodation need to be addressed through the policy and any separately agreed report scope.
How the report supports an insurance decision
Give the reporting professional the insurer's or broker's instructions before work starts. Confirm the assessment basis, intended recipient, inspection needs and required professional qualifications.
The report does not determine which events your policy covers or guarantee that a claim will be paid. Discuss policy definitions, exclusions and limits with your insurer or broker. ASIC's Moneysmart guidance on choosing home insurance explains why rebuilding costs and policy details both matter.
Documents and fees
Provide the property address, building plans, approximate areas, construction details, existing insurance schedule and previous replacement cost report. Flag renovations, heritage features, difficult access, shared facilities and any change in use.
Fees depend on the number and size of buildings, location, complexity, available records and inspection requirements. Request an insurance valuation quote and confirm the agreed inclusions and timing. If you need the property's market value for another purpose, see property valuations.
Frequently asked questions
Does an insurance valuation include the land?
The cost of purchasing land is generally separate from rebuilding the insured improvements. Confirm the exact assessment basis and included site works in the report instructions.
Is a quantity surveyor or valuer required?
The appropriate professional depends on the assignment and the recipient's requirements. Provide those instructions so qualifications and experience can be matched to the scope.
How often should the report be updated?
Review the need for an update with your insurer or strata adviser, particularly after substantial works or changes in construction costs. Any statutory requirements depend on the jurisdiction and scheme.
Will the report reduce my insurance premium?
A lower premium is not guaranteed. The purpose is to inform the rebuilding estimate; pricing also depends on the insurer, policy terms and other risk factors.
Can one valuation cover a property portfolio?
A coordinated instruction may be possible. Each property's scope, location, construction and information needs must still be assessed and documented.