Insurance Reinstatement Valuations
A professional assessment of the cost to completely rebuild a property,
guaranteeing adequate insurance cover in the event of a claim
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Update your browser!A professional assessment of the cost to completely rebuild a property,
guaranteeing adequate insurance cover in the event of a claim
Your home is likely to be your most valuable asset, so it’s vital that you insure it for an appropriate sum, although an ‘appropriate sum’ is hard to gauge.
An insurance valuation, otherwise known as an insurance Reinstatement Cost Assessment (RCA), is a calculation made by an independent expert that represents the total cost to reinstate your property in the event of it being destroyed. Surprisingly, the market value has no direct bearing on the reinstatement cost. The figure required by insurance underwriters is one that covers a total rebuild, including everything from debris removal to architects’ fees.
Insurance documents will typically list a ‘declared value’ and ‘sum insured’. The surveyor’s assessment determines the ‘declared value’. It considers factors such as the size of the building and location; whether it’s listed and would need specialist materials or techniques to be rebuilt. A percentage increase is then applied to this value, allowing for changes in inflation, to arrive at the sum insured.
Recent industry research* has revealed an alarming shortfall in cover amongst UK properties, with 9 out of 10 being insured for the wrong amount. The risks associated with this can be costly.
If you’re under insured, you may experience delays in your claim being settled and your insurance company may limit the amount they pay. The ‘Condition of Average’ will apply, whereby the insurer is not liable to pay the percentage difference for the damage comparable to the percentage by which the building is under-insured. Put simply, this means that if your property is under-insured by 25%, the insurer will only need to fund 75% of the cost of the damages.
If you’re over-insured, you’ll be paying an excessive premium. Over time, this could amount to tens of thousands of pounds. You can’t be compensated for overpayments if you failed to take the appropriate steps to secure accurate cover. This is particularly significant for landlords of large portfolios or residential blocks.
The significance of keeping your policy up to date cannot be understated. The Royal Institution of Chartered Surveyors (RICS) recommends that a Reinstatement Cost Assessment is carried out every 3-5 years by a qualified and experienced surveyor – or sooner if your property has been extended or altered. It involves an inspection of the building to understand the age, accommodation and construction. The surveyor will take measurements and refer to the Building Cost Information Service (BCIS) to calculate the total reinstatement cost.
OA Surveyors hold the prestigious RICS accreditation and have carried out numerous insurance valuations for a range of residential and commercial properties. We take an informative approach, explaining how we’ve arrived at the final figure and produce an accurate report that can be handed directly to your insurer.