These days, people buy a $500,000-block of land and stick a million-dollar house on it. "Riverbend" is the opposite: despite its land valuation of $2,637,000 - which is already several years old - the house, as old and old-fashioned as it is, probably wouldn't be worth more than (say) $800,000 - anyway, that's what I have it insured for.
Today the digger is in to dig the eighty metres of trenches for the new townwater supply. The noise, in this always peaceful part of the world, reverberates up the lane and across the river, and I half-expect for the phone to ring and a neighbour wanting to know, "What are you doing down there?", because again and again I've been told by neighbours to pull the old house down and replace it with something "contemporary".
I love the old house because I'm old, too, and far from "contemporary", and I leave it to the next owners to pull it down if they insist on going "contemporary". I have no idea what it would cost to rebuild this house in its old-fashioned robustness and solid building materials but getting $800,000 for it should it ever burn down will do me. It may never be enough to rebuilt it but in any partial claim I would always get whatever the repairs would cost, UP TO THE MAXIMUM INSURED OF $800,000.
That's because Australian insurance companies do not use the "averaging clause" which I still remember from my actuarial training during my articled years with a large German fire insurance company. This is how it works: your house has a replacement value of (say) $1,000,000 but through neglect or ignorance you insure it for only $750,000. If there is a total loss, the insurer pays you the full sum insured, but if it's only a partial loss which is assessed at (say) $200,000, the "averaging clause" kicks in, with the insurer claiming that you were 25% under-insured and therefore are entitled to receive only a 75%-pay-out, or $150,000.
I grappled with this many years ago when, trying to do the right thing by the insurance company and not wanting to fall foul of the "averaging clause", I had a long phone discussion with the insurance agent. When I mentioned the "averaging clause", he said, "Mate, you're way ahead of me. I used to be a chef and have no idea what you're talking about."
Well, I had it confirmed to me later on official letterhead paper that insurers in Australia do not use the "averaging clause", and ever since I have had the house insured for $800,000 because getting that much money should it ever burn down will do me. In the meantime, the answer to any phone call is, "No, I'm not demolishing my old house."
Keep your earmuffs on. The non-demolition will continue on Monday.
