House Rebuild Valuation for Insurance

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StarBlazer

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#127444 10-Aug-2013 11:01

Okay, so it's time to face the financial music as my insurance renewal has just come through.

We have a 180m2 house in Lower Hutt and the premium has leapt up - like I guess for most people.

The question is the "valuation". AMI have proposed a rebuild cost of $454,000 - the online calculator comes out at $600,000 which is a big difference and will no doubt push up my premiums even further. I don't want to come up short on the valuation but then I don't want to seriously overpay on the premiums!

So I'd like to get a professional rebuild valuation.

Can anyone recommend someone in the Wellington/Lower Hutt region?

What are your thoughts?

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#875020 10-Aug-2013 11:22

I know this isn't a direct answer, but I hope you find this helpful.

My wife and I are in the process of building a new house at the moment, with a national franchised building company.

As part of this process we needed to arrange finance with a mainstream bank; the cost of getting an "as built" valuation as part of the process cost me $600 + GST. I don't think I was ripped off too badly on that, unfortunately.

I'm not paying $600,000, and my building plans are bigger than 180m2; in my opinion, the $450,000 sounds more reasonable.

I believe that rebuild costs will be slightly higher than "green field" costs, which is what I'm paying, because if your current house was destroyed, and you needed to build again, there would be demolition and clearing costs on top of the "build" price; but I still don't think $600K is any where near reasonable for $180m2; and I'm pretty sure various builders could do you a nice $180m2 house for the $450K.

StarBlazer

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#875025 10-Aug-2013 11:36

jamesrt: I know this isn't a direct answer, but I hope you find this helpful.

My wife and I are in the process of building a new house at the moment, with a national franchised building company.

As part of this process we needed to arrange finance with a mainstream bank; the cost of getting an "as built" valuation as part of the process cost me $600 + GST. I don't think I was ripped off too badly on that, unfortunately.

I'm not paying $600,000, and my building plans are bigger than 180m2; in my opinion, the $450,000 sounds more reasonable.

I believe that rebuild costs will be slightly higher than "green field" costs, which is what I'm paying, because if your current house was destroyed, and you needed to build again, there would be demolition and clearing costs on top of the "build" price; but I still don't think $600K is any where near reasonable for $180m2; and I'm pretty sure various builders could do you a nice $180m2 house for the $450K.

Thanks - very useful. Based on my two valuations, the $/m2 ranges from $2522 to $3333. Reasonable? I guess how long is a piece of string?

I did roll my eyes a the fact that there is also a part of the policy that adds an extra 10% for "Post-event inflation protection".

Procrastination eventually pays off.

antoniosk

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#875034 10-Aug-2013 11:45

Welly is About $3k m2 for an easy access rebuild, about $4k for complex access or retaining.

Don't forget you need to allow for site clearing as well as building - prepping a site and clearing rubbish could easily cost $50k

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#875036 10-Aug-2013 11:54

antoniosk: Welly is About $3k m2 for an easy access rebuild, about $4k for complex access or retaining.

That seems high, based on my current building project; we're looking at closer to $2200/m2, and this is for a good quality build; the first building company we talked to implied closer to the $1900/2K m2 for an "above average" build.

About 3 years ago, I was on a school board, and the Ministry of Education funding model for new classrooms was $1200/m2. That was about enough for a simple classroom on flat ground; the work we actually had done was probably closer to $1500/m2 due to retaining, etc.

So, I think your estimates are potentially on the high side; ASSUMING reasonably flat ground or fairly simple retaining. Yes, building on a hillside or with significant ground work (which isn't uncommon in parts of Wellington) will push the price up, but the OP said "Hutt Valley", so I'm assuming flat (ish) ground.

antoniosk: Don't forget you need to allow for site clearing as well as building - prepping a site and clearing rubbish could easily cost $50k

Agreed; as previously mentioned.

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#875045 10-Aug-2013 12:51

Just put 950k. Only costsa few dollars more.

JimmyH

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#875051 10-Aug-2013 13:08

The online calculators aren't very accurate at all. The only way to ensure that you have an accurate estimate is to get a qualified quantity surveyor to prepare one for you. Expect to pay $6-800 for a decent job. Either that, or inflate the value from the online calculator by quite a bit to give yourself a safety margin.

mattwnz

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#875053 10-Aug-2013 13:28

The online insurance calculators are poor and miss quite a few things . One thing though is that the house today will likely be better than your current house due to higher building codes. So you will end up with double glazing and better insulation and earthquake resistance, and hence a house that should be worth more . You could also look for an insurer that still does full house replacement. They do exist.

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mattwnz

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#875054 10-Aug-2013 13:29

joker97: Just put 950k. Only costsa few dollars more.

You can't do that. The value has to be close to the true value.

BuzzLightyear

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#875105 10-Aug-2013 15:35

I went through this a couple of months ago. I used a company called Quantum to do the rebuild estimate. Cost about $900 to do the estimate via plans and photos etc. Will cost more for a site visit. Rebuild estimate is about $200k more than current policy so about $300 a year extra in premiums for me.

mattwnz

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#875153 10-Aug-2013 17:53

The are still only estimates. What happens if you go need to claim on insuarnce, and the company you have used for an estimate is off. Even when building a new house with plans, estimates can be well off, unless you use a quality surveyor to price all the components needed. All these are extra costs too. I used the calculator on our house, and it said that it would cost double what the properties RV, when you also add the land value to it. Granted, it will be probably worth more due to having double glazing, and wouldn't need any work doing to it. But to insure it at that value would at least double the premium, based on other peoples experiences.

PaulBags

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#875172 10-Aug-2013 18:36

With the way EQC and insurance work you might be better off just buying lotto tickets.

lapimate

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#875200 10-Aug-2013 20:06

antoniosk: Welly is About $3k m2 for an easy access rebuild, ...

It would be good to have a reference for your source given the figures being bandied about.

"Averaging": Household under insurance at least it appears NZ domestic house insurance is not permitted to be subject to "average": My policy sum insured for my house ... is too low

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#875247 10-Aug-2013 22:55

mattwnz:
joker97: Just put 950k. Only costsa few dollars more.

You can't do that. The value has to be close to the true value.

I just did. The csr said under 1 Mill I didn't need proof

mattwnz

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#875250 10-Aug-2013 23:17

joker97:
mattwnz:
joker97: Just put 950k. Only costsa few dollars more.

You can't do that. The value has to be close to the true value.

I just did. The csr said under 1 Mill I didn't need proof

You will be paying more for that insurance then, and I believe it is unlikely they will pay out that full amount when it comes to a problem, as the amount you say it is worth has to be reasonably accurate.

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#875259 10-Aug-2013 23:47

Absolutely correct. For a few bucks its worth every penny should the unthinkable happen. Over insurance never hurts anyone for a few bucks.

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