Insurance and “Building & Values”
November 26, 2012
Only recently we had occasion to
revisit the age old problem of "how
much insurance do I buy for my
freehold building"?
There are just so many variables to
consider and it can be a daunting task.
Basically you need:
1) to have enough sum insured to
be able to clear away the debris
and rebuild at current market
costs
2) and have enough left over to
cover for rent lost as a result of
the building being unoccupied.
Loss of Rent is the easiest to
calculate.
Simply multiply the monthly rent
by the time it will take to clear the
site, draw up plans, council building
approval, construction and retenant.
HOW LONG WILL THAT TAKE?
Remember to allow for the possible
delays in supply of contractors if you
are in a cyclone, earthquake, or bush
fire prone area.
In summary you will need to be
paid for loss of rent unit your
building is re-tenanted.
Clear the site - Insurers call it
"Removal of Debris".
We have seen cases where
unknown asbestos was discovered.
The additional cost and delays
caused by the asbestos discovery
was over $200,000.
Rebuilding cost is simpler to
estimate and there are also some
good 'online' guides to assist.
Always allow for local building
conditions, adjust for additional
costs to comply with what council
may require and the possible
additional costs incurred to secure
building and other contractors
particularly after a catastrophe.
Very little involved in insurance is
'rocket science' stuff.
As the insured, you do need to
apply some common sense thinking
to calculate enough sum insured to
put you back in business if you are
unlucky enough to be involved in a
problem.
This week’s
contributor is Tony
Carollo, Director,
Carollo Horton & Associates.
The above article was sent to subscribers in Pharmacy Daily's issue from 26 Nov 12To see the full newsletter, see the embedded issue below or CLICK HERE to download Pharmacy Daily from 26 Nov 12
