The Importance of Reinstatement Cost Assessments

Share:
Verified CHARTERED SURVEYOR APPROVED
The Importance of Reinstatement Cost Assessments

According to data from a leading insurance agency, eight out of 10 UK SMEs risk jeopardising their building insurance cover due to underinsurance.

The report suggests that the high rate of inflation means the level of cover on physical equipment and buildings may need updating to keep pace with the increased costs of replacing those assets. Reinstatement cost assessments remove the risk of underinsurance to make sure your critical assets are covered.

What are reinstatement cost assessments?

Reinstatement cost assessments (RCAs), also known as building insurance valuations, are appraisals of your properties for insurance purposes. The assessment looks specifically at the cost of repairing or renewing your assets to an equal condition to when new to make sure you can claim the full value if an unfortunate event occurs.

Currently, the Royal Institution of Chartered Surveyors (RICS) recommends that full RCAs are carried out every three years. It also recommends an annual adjustment to account for inflationary effects and suggests that RCAs should be updated whenever you make significant changes to buildings.

Why are reinstatement cost assessments so relevant now?

Over the last few years, there has been significant disruption that has led to a lack of building materials, construction labour shortages and cost increases across the board. All these factors have the potential to leave property owners underinsured and highly exposed to costs if they do need to make a claim.

In light of this, as a property owner, the only way you can be confident that you have an adequate level of building insurance cover is to conduct an RCA that accurately assesses the value of your property.

Without a reinstatement cost assessment, one risk is that you overinsure your property, leaving you with a premium that’s not necessarily aligned with its value. More likely, however, particularly given the current economic climate, is that your assets are underinsured, and that could have serious implications:

  • A claim does not cover the full cost of repairing or rebuilding your property
  • Lengthy negotiations with your insurers when making a claim can delay the work
  • You have to borrow money to complete the work
  • You’re unable to access funds to rebuild the property
  • Lenders and leaseholders take legal action for insufficient levels of cover
  • Your reputation and brand are damaged

The reinstatement cost assessment process

When arranging an RCA, it’s critical that the assessment provides the full cost of demolition and rebuilding, fees to local authorities and any other allowances associated with the reinstatement. Anything less than that could lead to insufficient insurance cover and a claim for negligence.

At Eddisons, our RICS surveyors conduct site assessments and use cost databases, recent construction costs and other sources to provide reliable valuations so you can fully reinstate your assets. We can assess everything from commercial units and factories to retail spaces, listed buildings, schools and colleges.

Find out more about our reinstatement cost assessment process and get in touch for a free consultation.

IF YOU HAVE AN ENQUIRY PLEASE FILL OUT THE FORM BELOW.

    By ticking this box you give consent to Eddisons Commercial Limited to email you in respect of news, sales and services. Where consent is not provided we will only use your information for the purposes of your enquiry. Please See our Privacy Policy for further information.
  • This field is for validation purposes and should be left unchanged.

DILAPIDATIONS EXPERT

LinkedIn

Ian Harrington

0113 209 1039

Whats your next step?

Contact us to find out more

EDDISONS NEWSLETTER

Our talented team of commercial property experts provide news, reports and expert insight. Join over 50,000 property managers, occupiers, landlords and investors receiving our latest insights.

our team

We’re proud to employ more than 350 talented individuals working across a multitude of disciplines.

OFFICE LOCATOR

Eddisons is rapidly growing; emphasised by our nationwide office network which is now 25-strong.

CONTACT US TODAY

We’re ready to take your call and can quickly pass you through to the right department.