Property reinstatement value

2nd May, 2019

The importance of accurate valuations to protect you from additional and unexpected costs cannot be emphasised enough. If your property suffered from a catastrophic event such as a fire or a flood that meant it had to be rebuilt from scratch, how confident are you that your insurer would cover the full cost?

Unlike your property’s market value (the sum you could expect to receive if your property were to be placed on the market now), your property’s reinstatement value is based on the cost of restoring your property to its former state and is calculated using factors such as the costs of materials and the scale of labour required.

Generally speaking, a property’s market value tends to be higher than its reinstatement value due to factors such as location and size. However, if your property requires construction with specialist materials, is a listed building or is based in a conservation area, the reinstatement value may be higher than the market value.

So, why is it so important that your property’s reinstatement value is accurate? If your property is underinsured, your insurer may apply an average clause whereby they can reduce their liability for a claim due to the true risk value not being disclosed at policy inception. In these instances, the insurer would calculate the proportionate amount to be paid in line with your existing policy for sums insured.

If there are discrepancies between the assumed reinstatement value and the actual reinstatement value, you could be leaving yourself in the precarious position of having to cover additional expenses that could otherwise have been covered by your insurer.

At Routen Chaplin, we believe that prevention is better than cure. The more information that is provided to your insurer, the more thorough and accurate your cover will be for any eventuality. With Routen Chaplin’s access to a wide-range of insurers, you will benefit from national expertise whilst also enjoying a localised and personable service.

If you’re not certain that your property’s reinstatement value is correct, there are two ways to assess this; you can either ask a chartered surveyor from the Royal Institution of Chartered Surveyors (https://www.ricsfirms.com/) to carry out a professional assessment or you can use the Building Cost Information Service’s house rebuilding cost calculator (https://abi.bcis.co.uk/)

If you would like expert guidance on finding the right insurance cover for you, we are here to help. Contact Routen Chaplin today on 0115 973 7303.