Insurance Reinstatement Cost Assessment

A reinstatement cost assessment establishes the cost of rebuilding a property if it were completely destroyed. The figure is used for buildings insurance and should reflect the full cost of reconstruction, including demolition, materials, labour and professional fees.

Underinsurance is a common issue. Research from the Chartered Institute of Loss Adjusters indicates that underinsurance occurs in over 40% of property insurance claims. If a building is insured for less than its reinstatement cost, insurers may apply the Average Clause, meaning any claim payment could be reduced in proportion to the level of underinsurance.

The assessment includes:

• demolition and site clearance

• rebuilding the structure

• contractor overheads and profit

• professional fees such as architects, engineers and surveyors

• statutory approvals and compliance costs

The figure produced is used as the recommended sum insured for buildings insurance.

It is important to note that reinstatement cost is not the same as market value. Market value reflects the value of the land and the property’s location, whereas reinstatement cost reflects the cost of physically rebuilding the structure.

At Manx Surveyors, reinstatement cost assessments can be carried out as a standalone service or provided alongside a RICS Home Survey, giving you a reliable rebuilding cost for insurance purposes.