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Strata building insurance
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02/08/2018 - 6:04 pm
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As a strata committee member, we recently went through the strata insurance renewal process.

The proposed quote comes back with 50% and above increase to premium, primarily due to the increase in sum assured.

As a committee, we felt that it is not justified to have building sum assured increase by more than 50% over one year and went back for a lower sum assured quote (20% increase).

We got knocked back from the broker saying that insurer determine the building valuation hence does not accept quoting for a 20% increase in building sum assured. Full stop!

It appears that there is ‘moral hazard’ from broker and/or insurer to over-inflate the total sum assured for a higher premium. As OC, we got no choice but to go with unreasonably large increase in sum assure.

Is there anything we can do as a committee?   

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Sir Humphrey
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02/08/2018 - 6:10 pm
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Our owners corp gets an independent valuation done every 5-10 years and presents that to an insurer. I don’t recall the insurer ever rejecting the valuation. Between valuations, each year’s AGM resolves that the committee shall renew our insurance increasing the insured amount in line with the insurer’s recommendation. That recommendation is only ever a few % each year to reflect general increases in property value. After some years of just having % increases, we get another valuation done to ensure we have not drifted too far off course. 

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Bn
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04/08/2018 - 8:38 pm
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You could go to a different broker or directly insure with chu. 

However, if you have an independent valuation then unless there is something defective with it then not insuring to the valuation would be foolish. You might want to check your office bearers cover as well. Under insuring has a some unexpected consequences. 

Our insurance went up 50% this year without a significant increase in insured amount… 

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Cosmo
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05/08/2018 - 11:20 am
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Our insurance went up considerably also.  We use a broker and I rang and asked why.  They said it was the cheapest they could get.  They got us two other quotes but both were more expensive. 

I don’t think it is right that an insurer determines the value of a building.  Has the insurer done a valuation? mostly we just find they increase the previous years value by a %. 

To my knowledge insurers usually don’t physically value a building except in the case of a large claim. 

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Sir Humphrey
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05/08/2018 - 4:50 pm
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Cosmo said
Our insurance went up considerably also.  We use a broker and I rang and asked why.  They said it was the cheapest they could get.  They got us two other quotes but both were more expensive. 

My experience over a decade of being on our committee plus observing a few years either side is that insurance costs go up over a few years, usually gradually but occasionally in a big jump, even using a broker. Then we would get a wind-fall of a sudden, substantial drop and then the cycle would repeat.

Perhaps every few years someone in the market decides to price competitively and the others follow, then for a few years they don’t compete. 

I don’t think it is right that an insurer determines the value of a building.  Has the insurer done a valuation? mostly we just find they increase the previous years value by a %…

Increasing the valuation by a few % each year in line with the insurer’s recommendation is a reasonable thing to do if the start point was an independent valuation and that valuation was not to many years earlier. 

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