Q&A – Reinstatement Cost Assessments

Q.  What is a building reinstatement cost assessment? 

Reinstatement Cost Assessment (RCA) is the basis adopted by the Royal Institution of Chartered Surveyors (RICS) for undertaking an appraisal of property, and plant and machinery/contents for insurance purposes. 

Q. What is a reinstatement cost? 

The reinstatement cost of your property is how much it would cost to completely rebuild the property if it were totally destroyed, for example by fire. It is not the same as the value of your home and covers the cost of materials and labour. Reinstatement costs are for an accurate reconstruction of a property. 

Q. Why are RCA’s required? 

  • To ensure buildings / estate are adequately insured in the event of a claim 
  • To avoid over insurance eg based on capital value 
  • To avoid distortion through index linking 
  • To comply with the lease and best practice 

Q. What does reinstatement of a property mean? 

Reinstating a property means rebuilding it to its original condition. In doing so, all efforts will be made to ensure that the same construction methods and materials are used as before. 

Q. How often should an RCA be conducted? 

The RICS recommends that full RCA’s are carried out every three years although updated RCAs should be undertaken whenever there are significant changes to the buildings, or investment/downsizing in the plant and machinery/contents. 

Q. Who will carry out the RCA? 

The RCA should ideally be carried out by a Chartered Quantity Surveyor. 

Q. What information is needed for an RCA to be completed? 

When undertaking an initial RCA, an accurate address and permission to access all areas of a property are required. Scalable plans may also be required in addition to Health and Safety documentation and any other relevant information (previous RCAs, schedule of condition, schedule of areas). 

Q.  What is the final reinstatement cost calculated on? 

The final Reinstatement Cost calculation will take into account the building’s size, age, construction, location and associated services and utilities. 

Q.  What is the difference between Buildings Declared Value (BDV) and Buildings Sum Insured (BSI)?

The BDV is the value of the property, the bricks and mortar: everything that is fixed to the property including fitted kitchens and bathrooms. It does not take into consideration the value of the land or the desirability of the area. It is simply the rebuild cost. The Sum Insured figure is always higher than the BDV to cover you against the rise in building materials or inflation over the period of insurance.

If you have further questions or require a Reinstatement Cost Assessment, please contact: Adam Sukhon – Head of Reinstatement Cost Assessments | adam.sukhon@adair.co.uk