Reinstatement Cost Assessments: The What, Why, and How

Insurance Reinstatement Cost Assessments

Whether you own a single property or have a diverse portfolio, you must know about reinstatement cost assessments.

What’s your first priority when you get a property in your name?
To get it fully insured for covering the cost of rebuilding, right?

Let’s get real, this is only possible when you know exactly what the rebuilding cost of the property is. Otherwise, good luck dealing with excessive payments in the event of a claim that won’t be covered by your insurance company. That’s the horror of owning a building that’s under-insured! On the other hand, over-insurance may make you pay unnecessarily high premium payments. Imagine what you’ll be getting yourself into if you have a large portfolio of property or residential blocks!

So basically, it’s a more complicated matter than you may think it is and hence, it should be handled carefully and professionally.

This is exactly where reinstatement cost assessments come in!

What Are Reinstatement Cost Assessments?

As the name suggests, reinstatement cost assessments help assess the rebuilding cost of your property in the event of destruction.

It’s a calculation made using the Building Cost Information Service (BICS) tables of the Royal Institution of Chartered Surveyors (RICS). An appraisal of your property as well as its fixed contents and machinery is conducted for insurance purposes.

This comprehensive assessment often includes the inspection and reporting of a wide range of buildings of various sizes, types, and uses. These properties usually feature complicated installations and complex structures.

Generally, you should carry out full reinstatement cost assessments every three years whereas, undertake the updated ones whenever your property undergoes significant changes or whenever there is substantial investment or downsizing in the plant and its contents or machinery.

Why Are They So Important?

Simply, an accurate reinstatement cost assessment will help you determine the accurate value of the property and ultimately, save you a lot of money on your insurance premiums.

To understand this better, let’s consider a situation.

If your property is under-insured, your insurance company can reduce your claim based on the level of the under-insurance present by applying the Condition of Average Clause. This means that you won’t get full compensation for the reinstatement of damage. So, if your building is 30% under-insured, your claim will be reduced by the same percentage and you’ll only get £6,000 for a claim that was actually for £10,000! The insurer will expect you to pay the remaining funds yourself.

Being left with financial woes in the event of major property damage isn’t an ideal situation, we tell you!
The causes of under-insurance commonly include:

• Disregarding suitable advice at the outset of a policy
• Not considering the inflation factor or applying it incorrectly when renewing the policy on a yearly basis
• Not taking the refurbishment, alteration, and extension of property into account

The reinstatement cost assessments will allow you to conduct an analysis of the values at risk as well as determine an estimated amount of maximum losses, which come in handy during insurer negotiations.

The best thing about conducting these assessments regularly is that they allow you to determine its alterations and redevelopment potential by inspecting the property externally. With this information, you can decide to carry out further developments to enjoy maximum returns possible.

How Do Reinstatement Cost Assessments Work?

It’s important to understand that the reinstatement costs of your property aren’t the same as its actual value. It’s the cost incurred when you completely rebuild the building with the added costs of materials and labour. Even the cost of finding the same materials that were used in the original construction of the structure as well as the cost of undertaking the same of similar construction methods when reconstructing.
In addition to this, the cost of clearing the land for the rebuilding project and reinstalling the core features, such as double glazing and central heating are also a part of reinstatement costs.

Determining the Accurate Reinstatement Costs of Your Property

The best way to determine the accurate reinstatement cost of your property and have the right value placed under your policy is by hiring a qualified chartered surveyor.

They’ll conduct the reinstatement cost assessment of your building along with all materials and items that belong to the site. They’ll come up with a figure that represents the cost to reinstate your property in the event of destruction or damage only after conducting a thorough inspection of the site. This will allow them to understand the age, accommodation capacity, and construction of the building so that they run a calculation that meets the industry standards.

Competent surveyors will have considerable experience in assessing different buildings, such as residential blocks, commercial properties, factories, and other establishments.

Chartered Surveyors at Arun Associates

The expert team of chartered surveyors at Arun Associates is well-equipped with the knowledge, market insights, and resources required to provide you with an accurate evaluation of your property’s reinstatement costs.

We truly understand that your property is one of your biggest assets and therefore, we strive to provide comprehensive and accurate reinstatement cost assessments. Taking a meticulous client-centred approach, our experts will assess your property and come up with a customized solution supported by the updated market cost intelligence.

If you’re a property owner or are responsible for the insurance of a residential or office block, we’ll love to assist you with reinstatement cost assessments to evaluate the full cost of damage and rebuilding along with any allowances that come with lease terms. To get our help to determine and arrange an appropriate level of insurance cover, get in touch today!

Finally, we would be happy to discuss your needs at no obligation so feel free to contact us.