Obligatory insurance values for Owners corporations?

Dear Jimmy

Last November our Strata property etc were valued by a qualified insurer, after the owners agreed to such valuation at the AGM in October.

Our buildings were valued at $8,270,00 rising to $9,100,00 within the next 24 months. At the AGM owners agreed to a value of $9,660,000.

Last month the Strata Manager paid the insurance premium for 2014-2015. The buildings were shown at a value of $10,046,400.

We have queried our Strata Manager who has refused to use the value of $8,270,00 for the following reason:

“It is not possible for the owners to insure at $8,270,000.  This was the valuation figure at 8/11/2013.  Should there be a TOTAL loss the owners would be under insured as this does not make any allowance for increases in cost between date of loss and increases expected in the approximate 2 years of reconstruction. That is why ALL valuation have a calculations for a rise in costs between the valuation date and the estimated time to reconstruct.”

We were under the impression that it was the OC had the right to set insurance values.

The reason for the EC to request the review is that our strata property would never been rebuilt the way it is now because of the type of buildings (mainly townhouses spread over a large land area situated in the city centre and 5 minutes walk to the beach).

Question: does the strata manager (entitled to commission on the insurance) have the authority to refuse the EC request?

Jef