Building Insurance

[Dolby]

What value do your insure your buildings at?

About 3 years back I had the property valued at R1.2m ... the municipal statement says R1.350m and my insurance statement says R1.650m.

Did I perhaps give insurance the R1.650m figure and don't remember - or do they pull it from somewhere?
I know people talking about building cost vs buying cost and very often there is a difference.
Did we maybe take the value and add for rebuilding or something?

Can't remember what I did - but looking at reviewing all my insrance

 

[chrisc]

A valuation of the property includes the land, and depending on where you live this can be a big chunk of the value. The insurance on the other hand is for the buildings, in case they burn down. If you work on R 6000 a square meter, you can figure out what you should insure your building for.

If you live in a posh suburb like Llandudno in Cape Town, or on the side of a mountain, it will be more. If you live in the country, but not more than 100km from a major centre, it will be less.

 

[Creag]

I cannot speak for all insurance policies, but most would look at the replacement value of the building. In other words, what would it cost to replace or rebuild it.

The value should be based on the specification of your home/building and take into consideration the permanent finishings, fixtures and fittings. Examples include the standard of the finish of the bathrooms and kitchen (taps, basins, tiles, etc.), carpets, paint, light fittings, built-in cupboards, tiles, doors, etc. And there is probably much more to be added to the list. Every home is likely to be finished differently.

The insurance value of the building must also include the removal of debris following the loss and all professional fees such as architects.

The municipal value is always like to be very different, as I think their value is the market value of the house.

It is important to read your policy wording thoroughly to understand the basis of settlement/replacement therein. Alternatively, talk to your insurance broker and ask them to guide you through the process of setting the sum insured. If they can't help you, find one who can, as I feel it is a part of the service they should provide (not necessarily to set the value for you - although some can do this - but rather guide you through the process and helping you to understand the intention of the policy wording).