Sherwood fire sparks timely warning about Property Insurance
The recent warehouse fire in the Brisbane suburb of Sherwood should send a significant warning to property owners and managers about property replacement cost assessments. The damage to the Sherwood warehouse was massive. From a property owner’s perspective, it was critical that they were not under-insured.
Unfortunately, all too often we see companies that lose their assets (due to fire, flooding etc) without first ensuring they are adequately insured. This is an expensive mistake.
Everyday, property owners are at risk of under-insurance due to a variety of factors. The case study below demonstrates the difference between an insurance replacement cost assessment prepared by a qualified Quantity Surveyor and a property valuation estimate.
The example is based on a 10,000m2 property which has a 4,000m2 industrial building, including a 500m2 office component.
|
Item |
Quantity Surveyor |
Valuation |
|
Current building replacement cost |
$2,480,000 |
$2,480,000 |
|
Additional building cost for office areas |
$290,000 |
$290,000 |
|
Cost of external hardstand, landscaping and services |
$600,000 |
Not considered |
|
Demolition cost of existing structure |
$240,000 |
Not considered |
|
Demolition cost of existing hardstand |
$120,000 |
Not considered |
|
Additional cost of asbestos removal |
$200,000 |
Not considered |
|
Additional costs to achieve current building code compliance |
$100,000 |
Not considered |
|
Replacement cost of Landlord owned tenancy fitouts |
$250,000 |
Not considered |
|
Total replacement cost |
$4,280,000 |
$2,770,000 |
|
Cost of re-design and professional fees |
$270,000 |
Not considered |
|
Cost of council fees and charges |
$80,000 |
Not considered |
|
Total development costs |
$4,630,000 |
$2,770,000 |
|
Cost escalation between disaster date and final completion of new building (18 months) |
$463,000 |
Not considered |
|
Total replacement cost |
$5,093,000 (1,273/m2) |
$2,770,000 (692/m2) |
