As a commercial property owner, the cost of being underinsured can be significant. Yet, so many owners underestimate the total cost of rebuilding their commercial property. To add insult to injury, if your building is not insured for full replacement value, your insurer can apply an under-insurance clause that will limit your claim payment.
With the help of your Insurance Broker, make sure to factor in these 6 additional expenses when working out the replacement value for your building:
- Debris Removal – This is often overlooked, but you WILL have to remove the damaged building at your property location before you can start to rebuild and replace. Plan accordingly.
- Architects, Engineers, etc. – Before you can start the rebuild, you’ll need to hire a variety of people to get the project underway. This includes, but is not limited to, surveyors, architects, and (in some cases) engineers.
- Government Regulations – If your property currently occupies an area that’s governed by local building regulations, you’ll need to factor compliance with those standards into the final cost. Example: Accessibility, Fire Safety, Etc.…
- Goods & Services Tax (GST) – As you already know, end-consumers are required to pay a 10% GST on most sales. After calculating the total expected costs of a full rebuild, add 10% of that total to ensure that your GST is covered.
- Legal Expenses – Legal disputes are an unfortunate reality when building, or rebuilding, your building. Be sure to factor in possible disputes with your local government, or with the contractors, architects, and engineers that you pay to complete the project.
- Material and Labour Costs – Be sure to update your building sum insured on a regular basis to keep inline with inflation. While you may be depreciating the value of your building for tax purposes, the actual cost to rebuild your building will generally go up over time due to an increase material and labour costs.
If you want to learn more about commercial property insurance, call Guard Insurance Brokers on 1300 167 143 and speak to one of our friendly Insurance Brokers.