Reinstatement Cost Assessment

Reinstatement Cost Assessments are now considered as a discipline in its own right, although in the past they were undertaken by a valuation surveyor. However, the significance of the advised figure is too important to be done like this now. This assessment provides the figure insurance companies require for the demolition and rebuilding of the property in the event of fire, flood etc. The insurance companies may require this to be updated anything from two to five yearly cycles in order to avoid the property being under or over insured.

Over or under-insuring your asset can result in significant issues. Over-insure your asset and you’ll have to pay a premium on your insurance which won’t necessarily align with what your property is worth, while under-insuring your property could be catastrophic in the event of a claim that relies on an under-estimate of the costs. Any pay-out will be restricted to the total value stated by the customer on the policy proposal, which may have originated from a report of an RICS surveyor. We follow the R~ICS guidance on providing a Reinstatement Cost Assessments which look at an assessment value in a structured and holistic way, incorporating any unique features, the location and the hard landscaping. Allowance is made for demolition, site clearance and any fees likely to be incurred. Build cost inflation may be added in.

It’s good practice to regularly review a RCA especially in the light of significant building cost inflation.