Why insurance valuations are important

[Updated: 11 March 2026]

It is compulsory for a sectional title scheme to arrange a professional building valuation at least every three years. This requirement is set out in the Prescribed Management Rules under the Sectional Titles Schemes Management Act 8 of 2011.

The valuation is not merely an administrative exercise; it plays a central role in ensuring that the scheme’s buildings are adequately insured. Importantly, the valuation also needs to be presented to owners at the annual general meeting (AGM), promoting transparency and informed decision-making.

The schedule of replacement values (SRV)

Closely linked to the valuation is the SRV.

This is a structured summary that helps trustees and owners clearly understand how the scheme’s insured values are made up. Over the years, we have actively promoted a standardised SRV format, one that presents sufficient detail for owners to see whether they are adequately insured without overwhelming them with technical data.

Why the SRV matters

The SRV summary is designed to show the basic building replacement rate per square metre and reflect the section sum insured before adding professional fees, demolition and debris removal and VAT.

It should distinguish between sections, common property, common property exclusive use areas (EUAs), yet ensure that the total unit sums insured still total up correctly.

It is not a perfect science, but this structured approach has proven to be one of the clearest and most practical ways to communicate insured values to owners.

The SRV is a critical governance requirement, properly prepared, not just a scanned insurance document.  Often misunderstood is that the SRV is not simply a copy of the insurance policy schedule.

The Prescribed Management Rules require the body corporate to prepare its own replacement value schedule. Relying on a photocopy of the insurer’s schedule can expose the scheme to risks and compliance gaps, particularly where policy structures, endorsements, or liability elements differ from governance reporting needs.

The SRV is therefore a governance document prepared for the scheme, separate from the insurer’s paperwork.

Keeping values accurate between the 3-year valuation cycle

Since valuations are only compulsory every three years, trustees need a practical method to keep insured values realistic in the interim.

For the two years between formal valuations, the original valuation should be escalated each year proportionately until the next professional valuation takes place.

The SRV summary becomes especially important during this period, serving as the working document that bridges the gap between formal valuations.

Preparation is key

Insurance advisors and managing agents who oversee this process can add significant value through good planning.

Best practice includes:

• Scheduling valuations ahead of policy renewal dates
• Ensuring updated replacement values are available when insurers calculate renewal terms
• Integrating valuation data into renewal workflows

At Addsure, our ATON system stores core valuation data so that building values form an integrated part of the insurance renewal process. Portfolio managers also have access to essential client valuation records, improving continuity and accuracy.

Specialist valuers make a difference

Valuation firms specialising in sectional title schemes have significantly improved their methodologies and reporting formats. Many are aligning closely with legislative requirements and the practical realities of community schemes.

Addsure works alongside these specialists to help ensure:

• Correct valuation methodology
• Proper treatment of common property and EUAs
• Alignment with insurance structures
• Practical reporting formats suitable for AGMs

A list of participating valuation specialists is available via the valuation’s resources section below.

Creating a smooth annual cycle

Managing agents can streamline operations by establishing a scheduled valuation cycle with preferred valuers.

This helps to:

• Spread workload evenly across the year
• Avoid last-minute renewal pressure
• Maintain compliance
• Improve trustee planning
• Ensure owners receive clear, timely information
• Making the SRV easy for owners to understand

Over time, we’ve refined the SRV format to make it clear and practical.

Our approach includes:

A clear summary of the most recent (or escalated) valuation summary at the top.  A logical breakdown of sections and common property with exclusive use areas is correctly stated. It is in a simple format with links to further explainers – a simple presentation document for AGM presentations.

We enhance owner understanding by linking the SRV to educational resources:

• An explainer booklet written in plain language
• Further reference links inside the booklet
• A detailed YouTube explainer video for those wanting a deeper understanding

Owners can review these resources ahead of the AGM at their own pace, leading to more meaningful participation and fewer misunderstandings.

In summary

The valuation and SRV process is more than compliance; it is about clarity, accuracy, and responsible scheme governance.

When handled proactively:

• Insurance renewals become smoother
• Trustees make better-informed decisions
• Owners understand what they are insured for
• Schemes reduce the risk of underinsurance

A well-prepared schedule of replacement values remains one of the most practical tools for achieving this.