What is it all about?
Our Reinstatement Cost Assessment (RCA) report will determine the amount the property should be insured for in event of the worst case scenario. This is taken to be a fire which significantly damages the building but leaves it standing. The valuation takes into account the cost of demolition, construction and fees associated with the replacement building.
Why might you need us?
When was your property last assessed?
The vast majority of commercial properties are insufficiently insured for reconstruction if the worst occurs. We recommend reviewing the figure annually and obtaining a formal valuation at no more than five yearly intervals. In a buoyant construction market, your current valuation is likely to deviate from the likely reinstatement cost due to construction inflation outpacing general inflation or other indices that may be used.
If your property is under-insured and the reinstatement is in excess of your cover, the insurer will usually not pay you the total amount you were insured for – the amount will be reduced by a method known as “averaging”. This calculation will reflect the amount by which you had been under-insured. The insured will often be liable for the shortfall in project funding, which can be significant.
Conversely, if the property is valued at a sum higher than the realistic reinstatement cost, you will be paying higher premiums than is necessary and losing a competitive edge.
Are you a Landlord?
Responsibility for insuring commercial property will depend upon the terms of the lease. Typically the landlord will assess the level of cover required premiums will be recovered from the tenant(s). It is usual for landlords to be able to recover the professional fees in ascertaining the reinstatement cost.