Insurance Reinstatement

What is a reinstatement valuation?

A reinstatement valuation (or reinstatement cost assessment) establishes what it would actually cost to rebuild your property from scratch — demolition, site clearance, professional fees and construction — which is the figure your buildings insurance should be based on. Rebuild cost is not market value: it is frequently 20–30% different, in either direction.

Reinstatement value vs market value

Market value answers “what would this property sell for?”; a reinstatement valuation answers “what would it cost to put this building back?” — and the two regularly diverge. A modest flat in an expensive city commands a market price far above its rebuild cost, because most of the price is the land and location. A listed stone farmhouse can be the reverse: cheap land, but a rebuild demanding heritage materials and specialist trades that cost multiples of a standard build. Insuring at market value therefore gets the sum insured wrong in both directions — which is why insurers, lenders and leases ask for an insurance reinstatement valuation rather than a sale price.

Why it matters

• Under-insurance — insurers can reduce or refuse claims proportionately if your sum insured is too low; a serious risk after extensions or years of construction-cost inflation.
• Over-insurance — an inflated figure quietly overcharges you on premiums every year, which compounds across blocks and portfolios.
• Mortgage and lease requirements — lenders and many leases require an accurate reinstatement figure, reviewed regularly (RICS recommends reassessment every three years or after significant alterations).

Under-insurance and the “average clause”

The sharpest edge here is the condition of average found in most buildings policies. If your building would cost £600,000 to rebuild but is insured for £300,000, you are not just exposed on a total loss — the insurer can reduce any claim in proportion to the under-insurance, so a £40,000 escape-of-water claim may be settled at £20,000. Years of construction-cost inflation mean a sum insured that was right when set can be badly wrong now, even where it has been index-linked. A professional reassessment is the only reliable way to close that gap before a loss exposes it.

When you need one

The common triggers are buying a property (the lender's figure is often a rough estimate), completing an extension or major alteration, taking on the management of a block of flats — where the lease usually obliges the freeholder or RMC to insure at full reinstatement value — reviewing a portfolio's premiums, and renewing cover after several years without a professional assessment. Non-standard construction, listed buildings and period features push rebuild costs furthest from market value, and are exactly where desktop estimates go wrong.

Blocks of flats and residents' management companies

For a block, the reinstatement valuation is not optional housekeeping — the lease typically obliges the freeholder, RMC or RTM company to insure the whole building at full reinstatement value, and the directors carry the consequences if it is wrong. The assessment covers the entire structure including common parts, plant and external works, and states the declared value at the assessment date; policies then commonly apply a “day one uplift” on top to absorb inflation during the policy year and the rebuild period. An accurate declared value protects leaseholders' service charges from both under-insured claims and inflated premiums.

What the valuer assesses

Our RICS valuers assess houses, flats, residential blocks and mixed portfolios — measuring the building, applying current industry-standard construction cost data (BCIS), and including demolition, professional fees and VAT where applicable. The result is a defensible base figure your insurer, lender or managing agent can rely on. See our guide to reinstatement costs for how the figure is built up, or the wider RICS valuation services for related instructions.

How a reinstatement cost assessment is carried out

1. Inspection and measurement — the valuer inspects the property and measures the gross external area, noting construction type, storeys, roof form and any special features.
2. Costing — current BCIS rebuilding cost data is applied and adjusted for location, specification, access and anything non-standard, from flint walls to sash windows.
3. Allowances — demolition and debris removal, professional and statutory fees, external works such as boundary walls, garages and outbuildings, and VAT where it applies.
4. The report — a signed assessment stating the reinstatement figure at the assessment date, ready to pass to your insurer, broker or managing agent.

How often should a reinstatement valuation be reviewed?

RICS guidance is to reassess every three years, and sooner after extensions, conversions or other significant alterations. Between assessments most policies index-link the sum insured, but indices track averages — they do not know that your street is conservation-area brick or that your roof is thatched — so the drift compounds. If you cannot remember when the figure was last professionally set, that is usually the answer.

Fees and timescales

Fixed fees quoted per property or portfolio, with most assessments delivered within a week. And if under-insurance has already surfaced in a contested claim, the panel's expert witness surveyors deal with the dispute side. Get a reinstatement valuation quote →