Why your body corporate should never skip an insurance valuation

One of the most important responsibilities trustees have is to ensure that their scheme is adequately insured against unforeseen events such as storm damage or destruction by fire.

Sectional title legislation obligates bodies corporate to have independent property valuations performed for insurance replacement purposes every three years.

The benefits of regular valuations

Prior to the changes in legislation, bodies corporate rarely had independent valuations done on their schemes. Independent valuations may have been requested but only in instances where the trustees were unsure of the proper replacement value of their scheme.

The benefits of an independent valuation for a body corporate are as follows:

  • Valuations are done regularly (every three years)
  • Regular valuations reduce fluctuations in replacement values and premiums
  • Valuations are done by independent, professional valuers
  • Professional valuers have in-depth knowledge of building replacement costs
  • Independent reports can be used to reduce or increase insurance replacement values
  • Valuation reports can be used to renegotiate insurance premiums based on updated valuations
  • Valuation reports substantially reduce the responsibility of trustees
  • Updated valuations provide trustees and owners with peace of mind that the scheme is adequately insured

When appointing a valuer, it is that trustees appoint an experienced valuer with sufficient professional indemnity cover which provides protection in the event of an incorrect valuation.

Trustees often overlook this important aspect when appointing valuers. This is especially beneficial should a claim be lodged against the trustees for not insuring the scheme adequately. The trustees are able to claim against the valuers` indemnity insurance for any losses suffered as a result of an incorrect valuation.

Insurance benefits due to regular valuations

Insurance replacement policies are renewed annually. If the insured values are not amended, the replacement values will increase together with the premium. These escalations normally vary between 8% and 15% but can be determined by the trustees.

Some of the negative effects of neglecting insurance valuations:

  • Excessive escalations in replacement values
  • Inflated premiums due to escalated values
  • Unnecessary increase in levies
  • Undue strain on body corporate budget

Always having updated replacement values means that your building is always 100% insured (not over-or underinsured) and the insurance premium is never unnecessarily inflated. It is also incredibly useful to always have the most recent replacement values on hand when renewing your insurance policy. Trustees can also rest assured that they have fulfilled their legal obligation.


Regular valuations and updated insurance replacement values go hand in hand. The financial benefit to a scheme becomes apparent when these two important aspects are combined to ensure compliance with legislation.

It is vital to use professional and experienced valuers to establish the correct insurance replacement values, especially considering that their reports will be scrutinised by your insurer.