Removal of Debris or ROD is the cost of removing and disposing of property (damaged or undamaged) to enable a building to be rebuilt after an insurable loss.
Cover for ROD is very subjective but it is required to form part of the overall building sum insured under Australian strata legislation in each State. As we are discussing S.A, we note that the requirement for full replacement value at all times is to protect Members in the event of a total loss. Doing so must allow for all risks associated with such total loss, including the removal of debris, before the rebuild can commence.
Almost all property and strata insurance policies provide limits for ROD and they usually comprise of one or a combination of three basic elements as outlined in this article as provided by Longitude Insurance.
ROD cover calculations should reflect some basic elements of your particular property including:
- Size and contour of the block
- presence of contaminates such as asbestos
- age of buildings and heritage status
- proximity to main roadways, shopping districts or schools impacting access to the property
Most strata insurance policies include allowances for ROD but many may be set/ limited to approximately 10% of the Building Sum Insured. If your ROD is not calculated correctly or purely based on a percentage, there may be a significant variance if you need to make a claim. The ROD costs could exceed the cover limits if additional expenses arise from your particular property type and circumstances, e.g asbestos removal, traffic management on a busy roadway. If these costs exceed ROD cover limits then the additional expense could be passed on to the unit holders.
A couple of things you can do to help ensure you calculate the correct ROD cover amount.
- Appoint a professional valuer as they have experience and knowledge in this task.
- Increase the Building Sum Insured and percentage allocated for ROD.
General Advice Warning:
The information contained in this article is of a general nature only. It does not take your specific needs, financial objectives or circumstances into consideration. You should look at your own personal situation and requirements before making any financial decisions. You should also refer to your Strata Insurers, Product Disclosure Statement and Financial Services Guide where relevant, before making any financial decisions.