Reinstatement Cost Assessments are an important part of property ownership.

Underinsuring a property asset has significant financial implications for a property owner. If the reinstatement figure is calculated inaccurately or has not been updated regularly every three years, there will be insufficient monies to rebuild the property.

10 Top Tips To Avoid Underinsuring a property asset

  1. Have a full assessment done by a Chartered Quantity Surveyor to find out the correct reinstatement value of the estate/building at least every 3 years (as recommended by the Royal Institution of Chartered Surveyors (RICS).
  2. Make the insurer aware of any changes made to the estate/building such as an extension, any improvements or replacements or indeed business changes, for example new machinery or technology in the building.
  3. Make sure the insurance cover is based on what it would cost to rebuild the estate/building not what the market value of the estate/building currently is.
  4. If a property is a listed building and/or in a conservation area, it will require special consideration. The time and cost of the repairs/rebuilds are likely to be far greater.
  5. Make the insurer aware of all the assets the estate/building has in order to ensure everything is fully covered.
  6. Remember to factor in the cost of professional fees such as for Consultants,  Architects, Surveyors or Structural Engineers in the event of a loss.
  7. Following the updated Brexit rules it is important to be aware of the impact of currency fluctuations and the affect it has on your sum insured.
  8. Check the VAT status as some building’s reinstatement might attract VAT whiles others might not and the position can vary.
  9. Insure everything: Contents should be insured for their new replacement value and the value should be sufficient to cover all of the contents.
  10. Ensure an understanding of the ‘average clause’ which is where a declared value is deemed to be under assessed and the claim amount is reduced by the same ratio.

For further information and expert advice please contact: Joe Moran, Head of Reinstatement Cost Assessments at joe.moran@adair.co.uk or call + 44 (0) 7917 797 097.