November 3, 2021— It is clear that confusion still persists today with the concepts of market value and insurance value. Indeed, many people and stakeholders in the real estate field do not distinguish between these two values, as well as between the concepts of replacement cost and reproduction cost, or even between the cost of new construction and the cost of reconstruction. But, first of all, how to distinguish the market value from the insurance value? Let us try here to disentangle all that.
October 3, 2021 - When it comes to determining the insurance premium based on the insurance value of a building (for insurance purposes), the broker or insurer will require his client to provide the cost of "reconstruction". Indeed, this premium is established according to the risks which are attributable to the building and the premises, but also according to the cost of reconstruction. We obviously understand that after a disaster we have to rebuild the damaged places, but the concept goes far beyond reconstruction. Indeed, the cost of reconstruction is impacted by contingencies and difficulties in restoring the inventory to its original condition. Think for example of the work involved in replacing a broken ceramic tile, on the wall or the floor, it goes without saying that this also involves the replacement of other tiles around, damaged by the work.
Your co-ownership is exposed to various risks, as an example, fires, water damages, theft and acts of vandalism, which are required to be insured against. When a loss occurs, the insurance of a co-ownership covers the building as well as the general liability of the syndicate of co-owners.
For the syndicate, subscribing to this type of insurance is mandatory. The law and most Acts of co‑ownership require it. The insurance contract specifies the coverages offered, as well coverage limits and exclusions, in addition to the deductible amounts.