Reinstatement Cost Assessments – The What and Why

If you’re dealing with insurance, then you might have heard the term ‘Reinstatement Cost Assessment’ thrown around. It’s yet another bit of jargon from the insurance and the conveyancing world that means a lot to us, but not too much to our clients. But at Harrison Clarke we believe in transparency, and spend a lot of time on RCAs to help our clients make sure they have accurate information that will allow them to get the best cover for their property. So, what does all of that mean?

What is an RCA?

RCA stands for Reinstatement Cost Assessments. They are reports provided by Chartered Surveyors that will outline the cost of replacing a property should the worst happen. They establish a value to demolish and rebuild a building and its surrounding area on the assumption of a total loss. The insured value of a property can sometimes be very different to the market value and even the purchase price. In fact the market value of a property is often, but not always, higher than the cost to rebuild it.

Who Needs an RCA?

RCAs are required for all sorts of reasons and by all sorts of people. For example, homeowners might want to make sure they have a suitable level of cover to protect them in the event of damage to their property. They may have been asked to get an assessment done by their insurers. For commercial landlords and property managers responsible for multiple buildings and types, an RCA helps them to comply with their obligations and ensure their interests are suitably covered and protected.

Special Cases

Sometimes you might want an in-depth reinstatement cost assessment to be done because your insurance policies made incorrect assumptions about your property. They may have not accounted for a special or unique circumstance that applies, especially if they work on what’s referred to as a ‘bedroom rate’, where they estimate the price to rebuild a property purely based on the number of bedrooms, adjusted for by location.

Other reasons you might need a specialist RCA include:

• If your property is constructed from non-standard materials like stone or cobb.

• If it has unusually high-quality finishes or fittings.

• It’s a listed building, or of special historic or architectural interest.

• It’s an older property built in or before the 1900s.

• It’s in a unique or difficult to access position.

Any one of these factors may result in more challenging and expensive rebuild costs that might be overlooked and not considered in your current level of coverage.

What Does an RCA Look Like

If you need to get a Reinstatement Cost assessment, then we would be happy to help you. This is what the process would look like.

• Once we’ve confirmed some basic details and the full address of the property, we’ll arrange to visit the premises.

• We will complete a full and detailed inspection of the property, making sure the right information is gathered for an accurate assessment. This allows us to check the size of the building, appreciate the nature of the site the property is on and identify any special features on the site or within the building that might affect the cost of replacements. We’ll need full access to the property in order to do this.

• Our experts will confirm the construction and quality of the fittings within the property to ensure the replacement building is of the same type and quality as the existing one, and that all features and facilities can be reinstated.

• On completion of the site visit, we will produce a report outlining our findings, along with a schedule that shows how we calculated the value and a final recommendation of the insurance value, which you should confirm with your policy provider.

Why is Getting the Correct Value Important?

Making sure you have an accurate reinstatement value is critical to make sure your property isn’t over or under–insured. This might not sound too bad, but if you find yourself in a position where your property is under-insured, it means the insurance provider won’t cover the full costs to reinstate a building in the event of a claim. That means the extra cost has tocome out of your pocket. If you over-insure a property, then you’ll end up paying higher premiums than you need to.

How Often do I Need to Get an RCA?

If you haven’t had a formal assessment for the reinstatement cost of a property, we would always advise that a full assessment is done so that an accurate value can be established for you.

If you’ve already had one done, the RICS guidance says that it should be updated every three years, in what’s called a major review. In between, years 2 and 3, the value can be adjusted in accordance with inflation, or data issues by the BCIS called the Tender Price Index.

We recommend that a full reassessment should be done in the fourth year after the initial assessment, or if you have any major changes done to the property – including extensions, additions or improvements to the building. This is mainly because improvements will affect the rebuild value of the property, and might mean you become under-insured.

How Can I Arrange an RCA?

If you find that you need a Reinstatement Cost Assessment, we can help. At Harrison Clarke we are experienced in performing reinstatement cost assessments, so we can make sure your assets are properly protected. If you have any questions, please feel free to contact our friendly team on 023 8155 0051.

We also have a range of videos talking through various aspects of the Party Wall process. You can access them via our website or our YouTube channel.

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