If the scheme is due for its triennial valuation, the body corporate may face a significant upward or downward adjustment in its sum insured, along with the associated increase or reduction in insurance premium. This depends on how the sum insured was adjusted during the 3 years since the previous valuation – for example, if it was escalated by the standard rate of 10-15% per annum, or not at all.
In case of the former, the prevailing sum insured will likely require a downward correction, which often shows insecurity amongst the members who might be concerned that a reduction will lead to under-insurance. However, this should not be cause for alarm, as it is a natural correction that needs to happen after a period of inflated increases. The happy consequence will be that the insurance premium will also decrease proportionately, and highlights the importance of using a reputable and independent valuation company with sufficient professional indemnity insurance.
Maintenance of capital assets
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