Apr 26, 2024

The Reinstatement Cost Assessment Process for Property Insurance

For property insurance, having an accurate estimation of the cost to reinstate or rebuild a property is essential...

For property insurance, having an accurate estimation of the cost to reinstate or rebuild a property is essential. This is where a Reinstatement Cost Assessment (RCA) comes into play. 


The RCA process begins with a comprehensive site visit conducted by a qualified surveyor. During this visit, the surveyor meticulously inspects the property, taking measurements and detailed notes regarding the type and quality of accommodation. The goal is to gather all necessary information to calculate the likely cost of reinstating the property in the event of total destruction or severe damage requiring rebuilding.


One of the fundamental assumptions of an RCA is that the property will need to be completely demolished and rebuilt from scratch. This includes not only the main building but also any surrounding features within the property boundaries, such as boundary walls, fences, and drainage systems. The surveyor must carefully consider various factors during the site visit, each of which can influence the final assessment.


Key considerations during the site visit include assessing the age of the building and the materials used in its construction. Additionally, factors such as location-specific challenges, access to the site, and adjacent premises must be taken into account. The surveyor also evaluates the potential presence of deleterious materials that could impact demolition and site clearance costs.


To document the findings accurately, the surveyor takes notes, photographs, and sketches to record the layout and features of the property. This includes creating schedules of accommodation, detailing the building's structure, finishes, fixtures, and fittings, as well as summarizing external areas and boundaries. Accurate measurements of floor areas, ceiling heights, and external features like drainage runs and outbuildings are also recorded.


Once the site visit is complete, the surveyor utilizes specialized software, often provided by the Building Cost Information Service (a subsidiary of the RICS), to calculate the rebuilding cost. This software generates a base estimate by multiplying the floor area of the building by a suitable per square meter rate for reconstruction. It also accounts for various adjustments such as the type of accommodation, service installations, external features, and drainage systems.


The final output of the RCA process is a detailed report prepared by the surveyor. This report outlines the property being assessed, highlights relevant considerations, and provides an estimated rebuilding cost. This information is invaluable for property owners in determining the appropriate level of insurance coverage to ensure adequate protection against potential risks.


The Reinstatement Cost Assessment process is a critical component of property insurance. 

Providing an accurate estimation of the cost to rebuild a property I required by your mortgage provider. 

With the assistance of qualified surveyors and specialised software, property owners can confidently safeguard their investments and mitigate risks effectively.