The Australian Institute of Quantity Surveyors (AIQS) has urged both Australian homeowners and their insurers to mandate the use of a quantity surveyor when taking out home insurance in light of recent natural disasters.
A study by the Australian Securities Investment Commission indicates up to 80 percent of Australians are currently underinsured. Given the recent flood events in QLD and NSW and bushfires in WA, it is imperative all parties are aware of the potential costs involved.
AIQS CEO Grant Warner says an impartial opinion given by a quantity surveyor will help for both homeowners and insurers to get a better idea of what it may take financially to rebuild.
“Preparing replacement cost assessments requires a high level of construction knowledge, an awareness of current material and labor costs and an understanding of the likely escalation in building costs following natural disaster events,” he says.
“These are specialist skills provided by certified quantity surveyors, whose job it is to provide expert, unbiased advice to ensure everyday Australians understand the costs to rebuild their homes.
“The recent NSW State Government announcement of $20,000 grants for non-insured homeowners, under their $112 million Back Home grant program, shows the extent of the problem in Australia. Although this is a significant investment by the State government, the actual amount per family will do little to cover the actual cost of replacement.”
Current standard home insurance policies estimate rebuilding costs on the consumer, with many providers not offering access to tools that give a homeowner the ability to estimate the cost of rebuilding their home. With insurers that do offer these tools, often there is a significant difference between calculations, with homeowners not including the likes of demolition and consultant fees which factor into rebuild costs.
“What many people think it will cost to rebuild their homes and the actual cost if it’s destroyed are often completely different,” says Warner.
“As an example, natural disaster means high demand and higher costs. You could be paying 50 per cent more to rebuild the same house following a large-scale flood or disaster event than you would on an individually impacted home.
“Also, replacement costs vary greatly from location to location. If you had a house in the middle of Sydney and the exact same type of house in a regional area, the cost to build could be up to twice as much in a regional area following a large-scale disaster event, purely because of supply and demand, labour, materials and accessibility.”
Warner says the use of a quantified surveyor may prove pivotal for Australians.
“Certified quantity surveyors have qualifications in construction and cost management and significant experience, so they know the costs and additional things to look for,” he says.
“If insurance companies won’t take this on board, then it becomes incumbent on the government to regulate what must be covered in a home building insurance policy and who is best positioned to provide this advice.
“Working with a professional quantity surveyor will not only help consumers to make more informed choices around insurance but will also provide insurance companies with realistic replacement valuations; a necessary implementation given Australia’s propensity for natural disasters.”