The Australian Institute of Quantity Surveyors (AIQS), the peak body for built environment cost professionals in Australia, is calling for insurance companies to mandate – and Australian homeowners to use – quantity surveyors' services during home insurance sales as properties continue to take a hit from extreme weather events and underinsurance remains a problem.
Currently, standard home insurance policies in Australia place the burden of estimating rebuilding costs on consumers. While a few insurers enable consumers to access tools to calculate the cost of rebuilding their homes, AIQS noted a significant difference between the calculations – with property owners failing to understand all the costs sufficiently to ensure correct estimation.
AIQS CEO Grant Warner explained that a natural disaster “means high demand and higher costs.”
“You could be paying 50% more to rebuild the same house following a large-scale flood or disaster event than you would on an individually impacted home,” he said. “Also, replacement costs vary greatly from location to location. If you had a house in the middle of Sydney and the exact same type of house in a regional area, the cost to build could be up to twice as much in a regional area following a large-scale disaster event, purely because of supply and demand, labour, materials, and accessibility.”
Warner said high demand and higher costs lead to underinsurance, noting the Australian Securities Investment Commission's findings that up to 80% of Australians are currently underinsured. In addition, preparing replacement cost assessments requires a high level of construction knowledge, familiarity with current material and labour costs, and understanding of the likely escalation in building costs following extreme weather events – highlighting quantity surveyors' roles.
“These are specialist skills provided by certified quantity surveyors, whose job it is to provide expert, unbiased advice to ensure everyday Australians understand the costs to rebuild their homes,” he continued. “If insurance companies won't take this on board, then it becomes incumbent on [the] government to regulate what must be covered in a home building insurance policy and who is best positioned to provide this advice.
“Working with a professional quantity surveyor will not only help consumers to make more informed choices around insurance but will also provide insurance companies with realistic replacement valuations, a necessary implementation, given Australia's propensity for natural disasters.”
