Schedule of replacement values: What owners approve at the AGM and why the AGM pack matters

Every year, annual general meetings (AGMs) raise the same insurance-related questions, often rushed, often misunderstood, and frequently reduced to a quick glance at the monthly premium.

During last year’s Let’s Get Physical events, one topic consistently stood out during Q&A sessions with managing agents and trustees: the schedule of replacement values (SRV).

It’s required by the rules, it’s central to correct insurance cover, and yet, it’s one of the least understood documents in sectional title schemes.

This article unpacks why the SRV matters, how it fits in with valuations and insurance policies, and where many schemes unknowingly expose themselves to risk. This article is based on the video below, where Candice Persson and Mike Addison unpack the issues that flowed from last year’s Let’s Get Physical events.

AGM reality: What members think they’re approving

At most AGMs, insurance approval looks something like this:

• Owners glance at the monthly premium
• They check the total sum insured
• A quick “yes” vote follows
• Everyone moves on

What’s often missed is that owners are not voting on a premium, but rather they are voting on the replacement value of their section and their share of common property.

That distinction is critical.

What the rules actually require

The Prescribed Management Rules require two separate but related things:

1. A valuation (updated at least every three years)
2. An SRV, prepared by the body corporate and approved by the members of the body corporate.

Importantly, the rules do not say “send out the photocopied participation quota (PQ) page from the policy schedule”. They specifically require a separate, prepared schedule

Yet in practice, many AGM packs simply include a photocopy or PDF of the policy schedule page, sometimes labelled a “PQ schedule” (which is technically incorrect in itself).

This shortcut creates multiple problems.

Why the policy schedule is the wrong document for an AGM

While many managing agents share the policy schedule in the name of transparency, it carries real risks:

1. It’s not designed for AGM approval – Policy schedules are insurer-generated, not governance documents which require proper attention.
2. It can change mid-year

Excesses, limits, terms, and endorsements often change at renewal or during the year if terms are changed.

Once shared at an AGM, managing agents may need to re-issue updates to all owners.

3. It can expose sensitive information

Policy schedules may contain:

• Policy numbers
• Bondholder details
• Bank names linked to individual sections

AGM packs are often widely circulated and should be treated as public documents.

The missing link: Valuation → SRV → Policy

The real issue isn’t just one document; it’s the connection between three:

1. The valuation
2. The SRV
3. The insurance policy

If these don’t align perfectly, the scheme may be underinsured, overinsured, paying unnecessary premiums, or incorrectly allocating costs between owners.

The SRV is the bridge between the valuation and the policy.

Why managing agents shouldn’t be expected to prepare the SRV

Managing agents are often placed in an uncomfortable position:

The rules say the body corporate must have a schedule. Trustees assume the managing agent must prepare it. Managing agents are understandably reluctant because they’re not insurance specialists.

That hesitation is valid.

Preparing a SRV requires:

• Interpreting valuation data
• Applying inflation escalations correctly
• Avoiding double VAT / double escalation inclusion
• Aligning unit values, common property, and additional sums insured

This is broker territory, not day-to-day scheme administration.

What a proper schedule actually does

A well-prepared SRV:

• Breaks down values per section
• Correctly incorporates common property included in unit sum totals
• Allocates additional sums insured fairly
• Reflects valuation data accurately
• Allows owners to understand what they are voting on

It also creates clarity around issues like one unit requiring a higher value due to a bank requirement and ensuring that extra premium is paid by that unit owner, not subsidised by others.

At claims stage: Where well-prepared schedules of replacement value really shine

One of the most overlooked benefits of a proper schedule appears during claims.

Loss adjusters and quantity surveyors routinely comment that:

• Clear schedules speed up assessments
• Common property values are easier to quantify
• Large claims move faster and with fewer disputes

In major events (floods, hailstorms, widespread damage), a clear schedule can mean the difference between a stalled, forensic investigation or a smooth, well-quantified claim.

Common errors we see when schedules aren’t done properly

Without a proper schedule, schemes risk:

• Common property being excluded or duplicated
• Door numbers confused with section numbers
• Incorrect geyser and warranty records
• Double escalation for inflation
• Double VAT between valuation and policy

These errors may look small on paper, but they add up quickly in premiums and disputes.

So what should happen at the AGM?

The clean, compliant process looks like this:

• The broker prepares a draft SRV
• The properly prepared schedule (SRV) is included in the AGM pack
• Owners review and approve it at the AGM
• The policy is then aligned to the approved schedule
• Responsibility for values is transparently shared

At that point, trustees aren’t guessing and managing agents aren’t exposed.

The bottom line

An SRV is not:

• A policy schedule
• A technical afterthought
• A tick-box exercise

It is a governance document, a risk-management tool, and a claims accelerator.

If your scheme doesn’t have one, or if it’s simply a photocopy of the policy schedule, it’s time to rethink the process.

Want to understand this visually?

Watch the full discussion below, where Candice and Mike walk through real examples, AGM scenarios, and practical consequences.