Strata Insurance Valuations

What a Strata Insurance Valuation is

A Strata Insurance Valuation estimates the cost to reinstate a building for insurance purposes. It is also known as a Reinstatement Cost Assessment (RCA), and the two terms describe the same report.

It is not a market valuation and it is not a sale price. It answers a narrower question: if the building had to be rebuilt, what would that realistically cost?

The recommended sum insured accounts for far more than construction alone. It allows for demolition and removal of debris, professional fees, the time it takes to get a rebuild underway, cost escalation across that period, and the cost of rebuilding to the standards that apply today rather than those that applied when the building was first built.

The purpose is to leave owners neither under-insured, where a claim would fall short of what is needed, nor over-insured, where premiums are paid against a figure the building could never cost to replace.

Why a Quantity Surveyor rather than a valuer

A property valuer assesses market value, which is what a building would sell for. That figure is driven by location, demand and comparable sales, and it has little to do with what the building would cost to rebuild.

A reinstatement assessment is a construction cost question, not a market one. It means measuring the building, understanding how it was built, and pricing the work of replacing it, including demolition, professional fees, compliance with current standards and escalation across the rebuild period. That is the discipline a Quantity Surveyor practises daily.

Relying on a market figure as a sum insured is a common cause of under-insurance, because the two numbers answer entirely different questions and can differ substantially in either direction.

Who prepares the report

Asset Scope's reports are prepared by a Certified Quantity Surveyor (CQS) and Member of the Australian Institute of Quantity Surveyors (MAIQS). See our accreditations →

What the assessment covers

• Reinstatement of the building and common property — the structure, common areas and the fixed items that form part of the insured asset.
• Demolition and debris removal — clearing the site before any rebuild can begin.
• Professional fees — the consultant and approval costs a rebuild would require.
• Escalation — an allowance for cost movement across the assessment period and the expected rebuild programme.
• Current standards and compliance — the cost of rebuilding to the codes and requirements in force now.
• Stated exclusions — what has deliberately been left out, so the boundary of the figure is visible.

Who it's for

Strata managers, owners corporations, body corporates and committees who need a defensible basis for the insured value of a building, and who may need to explain that basis to owners, brokers or insurers.

Strata is where these reports are most often required, but the same assessment suits any owner of any building. Commercial, industrial, retail and standalone residential property all need a sum insured that reflects what it would actually cost to rebuild, and we prepare Reinstatement Cost Assessments across all of them.

It is also relied on by owners who want confidence that the figure on the policy has been arrived at by a Quantity Surveyor rather than carried forward and indexed year after year.

What you receive

• A recommended sum insured, clearly stated.
• The basis of assessment and the methodology used to reach it.
• Assumptions, inclusions and exclusions, set out so they can be checked.
• The date of assessment and the period the figure is intended to cover.
• A recommendation on when the valuation should next be reviewed.

Reviewing the valuation

Reinstatement costs move, and a figure that was reasonable a few years ago may no longer be the correct amount to insure your building for. The Australian Institute of Quantity Surveyors (AIQS) recommends that insurance replacement cost reports are updated every three years.

Requirements can also be set by the policy or by the jurisdiction the building sits in, so we confirm the applicable basis for your building and note a review recommendation in the report.

How the work runs

Every engagement starts by confirming the report type, purpose and the information available, then moves through review, assessment, checking and issue. The full sequence is set out in how we work.