Insurance Reinstatement Cost Assessment
The Royal Institution of Chartered Surveyors (RICS) states that an Reinstatemnet Cost Assessment is an ‘assessment of building reinstatement cost for insurance purposes’. The assessment is typically carried out by a qualified surveyor who calculates the cost to rebuild the property either on an elemental basis or by application of a rate per square meter calculated from building statistics. The Reinstatement Cost Assessment also advises the client on the total cost of demolition, professional fees, any statutory authority fees and the relevance of current statute which could impact on the Reinstatement Cost Assessment.
Should the property be under insured, the insurers are not obligated to pay the full costs required to reinstate the building. They are likely to apply the Condition of Average Clause, whereby the amount of claim is reduced proportionally to the value of under insurance. The Property Owner may lose their asset and the tenants may loose their demise. Should this occur, the property owner or managing agents (where appointed), will be liable for any shortfall in the insurance settlement.
How often should RCA’s be carried out?
The RICS recommend a full Reinstatement Cost Assessment should be carried out every three years with desktop re-valuation on a yearly basis. It is essential that a Reinstatement Cost Assessment is carried out when there is a change in the building such as an extension or an improvement.
Ashby Building surveyors can complete Reinstatement Cost Assessment on a fix fee, based on the reinstatement cost or on an hourly rate depending on what suits you best.
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