Reinstatement Cost Assessment

Everyone understands the importance of insuring buildings against the risk of damage or destruction by fire or flood. What is less well understood is the importance of an accurate assessment of what it would cost to restore or rebuild the building if the worst were actually to happen. An insurance policy will be of little help if it is based on an underestimate of that figure, and the Association of British Insurers advise that 20% of householders are in fact underinsured, while one study has put the figure at as high as 80%.

That is why it is essential to have an accurate Reinstatement Cost Assessment (RCA), updated about every three years. An RCA is a careful, professional assessment of what it would cost to rebuild a property. It allows the owner to insure it for the right amount, avoiding the unexpected costs that result from undervaluation – as well as the unnecessarily high premiums that result from over-valuation.

An accurate Reinstatement Cost Assessment is also important for insurance claims for repairs, as opposed to rebuilding from scratch. Most insurance policies specify that in the case of undervaluation by more than ten percent, any pay-out for repairs will be in the same proportion as the proportion of the amount insured for to the actual cost of rebuilding. For example, if the property has been insured for only half that figure, then the insurer will pay out only half the amount needed for repairs.

At EKA, we provide RCAs for a variety of building types, and specialise in residential blocks. Because we also provide a full range of related design and technical building surveying services, we tend to see RCAs as part of a package, which allows for a more holistic approach to looking after a building.

For example, in 2012, we prepared a Reinstatement Cost Assessment for the prestigious Block 4 Albert Hall Mansions, overlooking the famous concert hall. The following year we were asked to provide a strategic maintenance plan and to manage the external repair and restoration of the external building façades.

During these works a fire broke out in one of the apartments, causing major damage to the building. We were then appointed on behalf of the building’s insurers to assess the damage and coordinate the repairs to the areas affected.

Clearly, at each stage we benefitted from our previous knowledge of the building, and were able to see through the original RCA to orchestrating actual repairs following the fire. This is the great advantage of offering a full portfolio of services.

Albert Hall Mansions is also a good example of the particular challenges of period buildings. These are both practical – e.g., older buildings tend to be built from distinctive materials, and the extra cost must be factored in  – and legal, as if a building is Listed, the terms of restoration will have to be discussed with the local planning authority. A good RCA will take all of these factors and more into account, and provides a property owner with genuine peace of mind.

For further information, visit our micro website www.reinstatementcostassessment.com where you can download our latest brochure or contact:

Martin Barsley – MRICS MBIFM  – 0203 667 1510
martin@earlkendrick.com