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Strata Tip #79: Insurance – Consequences of under insuring

The obvious consequence of under insuring is that if you do need to make a claim, there will be a short fall between the proceeds of the claim and the damage that you have suffered.  It’s pretty hard to reconstruct a $10 million building, with $8 million.  Bodies Corporate are generally obliged to obtain a valuation at least once every 5 years for the full replacement value of any buildings they are required to insure.  If that valuation is not obtained, or up to date, and a catastrophe occurs, then the lot owners most affected could sue the body corporate for breach of statutory duty.