Following times of unprecedented storm events, the scale of storm damage, flooding and building defects is on the rise.

I have witnessed many building owners fall foul of undervaluing their buildings on their insurance policy and subsequently being unable to claim on their insurance. An insurance reinstatement valuation or reinstatement cost assessment (RCA) is essentially a value placed on a building/site to rebuild it, should it be damaged or destroyed. Declaring this value is a standard requirement for all building insurance policies, but for a policy to be valid, the figure must be correct.

It is reasonable to expect insurers to refuse claims when the declared rebuild value is incorrect. Compare this to insuring a car – the lower the car value or the lower the milage stated at the start of a policy, it is likely the insurance premium would be cheaper than a policy with higher figures stated. However, if it came to a claim and the policyholder was found to be fraudulent or misleading, then their insurance would be invalid. The insurance industry is a business and it is common knowledge that claims will be reviewed and refused if declared information is inaccurate. The same is applied to buildings and this is proving very problematic for building owners making insurance claims. 

I am finding policyholders are either refused insurance as a consequence of underinsuring their property or finding that their claim is being reduced by the percentage which they have undervalued the property, therefore leaving a proportion of the insurance works bill to be covered by the property owner/policyholder.

The costs of rebuilding a property in the UK have surged in recent years, most notably due to inflation, energy costs, rise in both materials and labour costs and also due to shortages in both materials and labour. Insurers are more aware of this than ever before and are using this to limit claims or refuse them. 

My advice to clients is to ensure their property has a correctly calculated reinstatement cost assessment for insurance purposes, especially where property portfolios are held. A reinstatement cost assessment should not simply be a standard M2 rate multiplied by the area of the building. There is far more to the exercise than this alone and failing to consider abnormal building costs, features, materials, access, listing status, professional fees and other unique factors which can have a significant impact on value.

I would strongly urge commissioning an informed reinstatement valuation / reinstatement cost assessment by a competent and experienced Chartered Building Surveyor in order to protect your interests moving forward. Should the need to claim on insurance arise, there should be sufficient cover in place. The added benefit of this exercise can also be to reduce an insurance premium if a property is currently overvalued, therefore this exercise could lead to immediate savings year on year.

The team at Adept Building Consultancy can help with your reinstatement cost assessment needs and keep you covered. Just get in touch.