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These days, insurance companies offer to cover you for all kinds of eventualities, and the choice has never been bigger. In the world of Strata Management, this is no exception. |
However, how do you determine whether a policy meets up to your requirements? How can you compare one insurer over another so as to determine what their quotation contains? What important areas should be considered, besides premium?
When comparing Strata Insurance companys and the quotations they provide, have the following points in mind:
COMPANY Robustness
As with all types of insurances cover, it is advisable to find out as much about the insurance company providing the cover as possible, especially its financial strength and stability. Smaller insurance companies intent on making short-term gains will struggle to deliver in the medium to long term, so doing research is essential. Carefully consider how many claims are denied, how quickly claims are processed and paid and how customer-friendly administrative services are. Be especially careful of companies offering extremely or unusually low insurance premiums.
Policy Coverage
This should be examined carefully so as to insure that all members of the Owners Corporation have their assets adequately covered. All policies should meet the requirements laid out in the Strata Schemes Management Act (click here for more information on the act).
Under-insurance
In the event of a significant or total building loss, the full replacement value of the building needs to be taken into consideration. The Strata Schemes Management Act obliges an Owners Corporation to insure the building for its full replacement value, and under-insuring has a direct impact on the Owners Corporation who will need to cover any shortfalls. Replacement value must include correct, accurate and up-to-date valuations which cover inflation, increased construction costs and other elements which might affect the total insured value.
Catastrophe cover
Whilst an Owners Corporation must insure a building for its full replacement value, it is recommended that the policy include catastrophe cover. Rebuilding following a catastrophe (e.g. earthquake, hurricane) is shown to cost more than rebuilding due to single event (e.g. building fire) because of the impact to the surrounding infrastructure and service availability. It is recommended that catastrophe cover equal to 30% of the replacement value of the building be applied. Underinsurance in this regard may result in members of the Owners Corporation finding the shortfall themselves.
Swift Claim Payments
Having claim payments delayed can impose considerable cost and inconvenience for Owners Corporations, especially when contractors and suppliers require payment for work completed. Outstanding costs may need to be settled by the Owners Corporation whilst waiting for claim payments to be processed. Asking for references to demonstrate swift payments is one way to insure delays are avoided.
Compare Premiums Carefully
Whilst premiums can vary, usually the cover attached to them does too. Whilst shopping around for a competitive premium, insure that the cover and benefits offered are comparable. Remember that when spread amongst the Owners Corporation, the difference between premiums may be minimal, but the service offered could have a considerable impact on all members.
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