Insurance Reinstatement Cost Assessments

Insurance Reinstatement Cost Assessments

Most of us will thankfully not experience the catastrophe of a fire, flood, explosion or impact of vehicles to our property. But there will always be those who do, and they will have to fall back on a valuation of rebuilding costs. We need, for peace of mind, an accurate valuation for rebuilding costs of our homes or businesses, and those valuations need to be updated for inflation, and rising costs in labour and materials, periodically.Nothing is worse than having a catastrophe and damage or worse to your property, only to discover you are underinsured. That can have significant consequences, and result in your financial claim to your building insurers being less than you expected. That means you will need to find the balance of monies for any property rebuilding, or the property reinstatement costs. The term ‘averaging’ or ‘average’ is sometimes used by building insurers to reduce pay-outs to claimants.

This applies irrespective whether your claim is to reinstate just part of your property, or a total rebuild on your land. The land cost of such valuations is normally excluded, as the site will usually be reused. Professional building surveyors are trained in this type of cost reinstatement assessment of buildings. They review the type of building, e.g. commercial, residential or industrial, the location geographically, type of construction, materials used, traditional or non-traditional, and physical size and area. There may be various outbuildings to some properties, and these may also need to be taken into account.

In a major fire, explosion or impact, the property may need to be demolished, and rebuilt, so the costs will have to include for professional fees and clearance costs of the site. If there are materials such as asbestos or contaminants on the site, they will have to be removed in accordance with current health and safety legislation. Those costs can be considerable. Plant and equipment, such as heating, electrical, water and gas installations may need to be reinstated.

Professional building surveyors will have access to historic building costs, and will apply this on a per square metre basis, to carry out the relevant calculation. In most cases they will need to visit the property, collect information, and do the valuation in the form of a report. Most such valuations are revised annually, or periodically, to ensure cost reinstatement valuations remain accurate.

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