Reinstatement Valuations
Getting a property insured properly not only allows you to get a mortgage against its value, but also protects your investment and your wellbeing. If anything were to happen to the property, you would want to be protected financially from the costs. There are many things that surveyors take into account when inspecting a home to create a valuation for insurance purposes. One of these is the building’s Reinstatement Costs.
What do Reinstatement Costs cover and how are they calculated?
The Reinstatement Cost of your home is how much it would cost to completely rebuild the property if it were totally destroyed, for example by a 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 your property. They take into account the cost of finding the same materials (where possible) as were used in the original property and of undertaking the same or similar construction methods when rebuilding.
Reinstatement Costs also takes into account the cost of clearing the land ready for rebuilding to begin and reinstalling facilities such as central heating and double glazing.
How can I find out how much a property’s Reinstatement Costs will be?
To find out how much a potential property’s Reinstatement Costs will be, you should use a qualified surveyor. You will get an accurate valuation that your insurance company can use to determine the amount of cover you receive and the premiums that you pay. This keeps you protected in the future from any serious accidents that could destroy or dilapidate your home.
Having the right valuation is also important in order to get the correct insurance required before you get a mortgage. Contact Building Initiative to find out your property’s Reinstatement Costs.
Why do I need to know the Reinstatement Costs of my home?
It is important to find out how much your home would cost to rebuild it so that you can get the proper insurance. The last thing you want to happen is for you to insure your home for an amount below the Reinstatement Cost, and to only find this out in the unfortunate event of an accident. Your insurers will only pay out their portion of the costs – the Telegraph illustrates this well: if you home is worth £100,000 and you have it insured for £75,000, then your home suffers £50,000 worth of damage, you will only receive £37,500 from your insurers (source: The Telegraph).
You won’t be able to get a mortgage on a property until your lender can see proof that it has been properly insured. But rushing this stage of the process to speed up your application can result in you being insured for less than the value of your home. In the case of the above example, the last thing you want is to suddenly find yourself with no home and a large investment required to rebuild it.
The process of purchasing property can often be a complicated and overwhelming experience, especially if you are a first-time buyer or have not moved in a while. However, one of the unanimous decisions that any sensible home buyer will agree upon, is making sure that your property is fully insured to cover all buildings and contents. If your home cover is not updated to include the full restoration costs, you could leave yourself vulnerable to excessive payments that will not be protected by your insurance company. That’s why you should always make sure that your property’s Reinstatement Cost Assessment (RCA) is up to date.
But what are Reinstatement Costs Assessments?
RCA’s refer to a calculation made using the RICS Building Cost Information Service (BICS) tables. The sum represents the full costs involved in restoring or rebuilding a property following a range of insured events such as a fire, explosion, flooding, subsidence etc. It is based on the total floor area and includes any additional costs required before reconstruction on the property can begin. For instance, demolition fees and the price of materials and labour.
How often should an RCA be updated?
RICS recommend that your RCA is updated every three years, to effectively account for the effects of inflation. However, many housing experts will agree that an assessment should be conducted whenever major renovations are made to the property and definitely when the property is extended thereby increasing its gross floor area. This way, you can most effectively guarantee that the full value of your property is protected.
So, what are the dangers of being under-insured?
If your property changes and is damaged or destroyed, then you will need to make a claim. By employing a system known as ‘averaging’ to your claim, the insurer will only cover a percentage of the full reconstruction costs. Meaning that you will not receive the necessary payment and instead be expected to provide the remaining funds yourself.
Contact us
That’s why, if you require an RCA, you should always use a qualified Chartered surveyor. With RICS regulated experts covering London and Cambridgeshire our network of professional surveyors can provide comprehensive RCA’s in areas that are local to you. To book an appraisal, and ensure peace of mind, you can contact our helpful and friendly sales team by telephone on 0207 846 0060, for expert advice and guidance. Alternatively, if you would like to instantly book a survey you can do so by clicking here.