Reinstatement Cost Assessment: The dangers of being under-insured

Reinstatement Cost Assessment: The dangers of being under-insured

The process of purchasing property can often be a complicated and overwhelming experience, especially if you are a first-time buyer or have not moved in a while. However, one of the unanimous decisions that any sensible home buyer will agree upon, is making sure that your property is fully insured to cover all buildings and contents. If your home cover is not updated to include the full restoration costs, you could leave yourself vulnerable to excessive payments that will not be protected by your insurance company. That’s why you should always make sure that your property’s Reinstatement Cost Assessment (RCA) is up to date.

But what are Reinstatement Costs Assessments?

RCA’s refer to a calculation made using the RICS Building Cost Information Service (BICS) tables. The sum represents the full costs involved in restoring or rebuilding a property following a range of insured events such as a fire, explosion, flooding, subsidence etc. It is based on the total floor area and includes any additional costs required before reconstruction on the property can begin. For instance, demolition fees and the price of materials and labour.

How often should an RCA be updated?

RICS recommend that your RCA is updated every three years, to effectively account for the effects of inflation. However, many housing experts will agree that an assessment should be conducted whenever major renovations are made to the property and definitely when the property is extended thereby increasing its gross floor area. This way, you can most effectively guarantee that the full value of your property is protected.

So, what are the dangers of being under-insured?

If your property changes and is damaged or destroyed, then you will need to make a claim. By employing a system known as ‘averaging’ to your claim, the insurer will only cover a percentage of the full reconstruction costs. Meaning that you will not receive the necessary payment and instead be expected to provide the remaining funds yourself.

Contact us

That’s why, if you require an RCA, you should always use a qualified Chartered surveyor. With RICS regulated experts based across England, Scotland and Wales, our network of professional can provide comprehensive RCA’s in areas that are local to you. To book an appraisal, and ensure peace of mind, you can contact our helpful and friendly sales team by telephone on 01249 569010, for expert advice and guidance. Alternatively, if you would like to instantly book a survey you can do so by clicking here.