Why Insurance Valuations Matter More Than Ever for Strata Buildings
- Propti
- Jan 19
- 2 min read
Insurance valuations are one of the most overlooked — yet critical — responsibilities for strata committees and owners corporations.
With construction costs rising, insurance markets tightening, and underinsurance becoming a growing risk, ensuring your building is insured for the correct replacement value has never been more important.
At Propti, we regularly see strata buildings exposed to unnecessary financial risk simply because their insurance valuation is outdated or inaccurate.
What Is an Insurance Valuation?
An insurance valuation determines the full replacement cost of a building in the event of a total loss.
This is not the market value of the property. Instead, it considers:
Demolition and debris removal
Professional fees (architects, engineers, certifiers)
Current construction and labour costs
Compliance with today’s building codes
Escalation allowances and contingencies
For strata buildings, this valuation underpins how much cover the owners corporation must hold under strata legislation.
Why Underinsurance Is a Serious Risk
Many strata buildings are unknowingly underinsured. This often happens when:
Valuations are not updated regularly
Committees rely on indexed increases rather than full reassessments
Construction costs rise faster than CPI
Major regulatory or compliance changes occur
If a building is underinsured, insurers may:
Reduce claim payouts proportionally
Apply average clauses
Leave owners to fund significant shortfalls via special levies
In a major loss scenario, this can place severe financial strain on every lot owner.
How Often Should a Strata Insurance Valuation Be Updated?
As a general rule:
Every 2–3 years for most strata buildings
Immediately after major renovations or capital works
More frequently for older, complex, or high-risk buildings
Given recent volatility in construction pricing, many insurers are now strongly encouraging more frequent updates.
Why Construction Cost Increases Matter
Over the past few years, construction costs have increased well beyond historical averages due to:
Labour shortages
Material price volatility
Supply chain disruptions
Stricter compliance and safety standards
Relying solely on indexation can result in a significant gap between insured value and actual rebuild cost.
The Role of an Independent Valuer
An independent insurance valuation provides:
A defensible, evidence-based replacement cost
Confidence for strata committees and lot owners
Greater certainty at claim time
Support when negotiating with insurers or brokers
Importantly, it demonstrates that the owners corporation has taken reasonable steps to insure the building appropriately.
How Propti Helps
Propti specialises in insurance valuations for strata buildings, delivering:
Clear, compliant valuation reports
Practical guidance for committees and managers
Valuations aligned with insurer expectations
Timely turnaround and professional service
Whether you manage a small strata plan or a large complex, Propti helps ensure your building is protected against the real cost of rebuilding — not yesterday’s numbers.
Final Thoughts
Insurance valuations are not just a compliance exercise — they are a critical risk-management tool.
An up-to-date valuation can mean the difference between a smooth insurance claim and years of financial stress for lot owners.
If your strata building hasn’t had a recent insurance valuation, now is the time to review it.
