Reinstatement Cost Assessments for Buildings Insurance

Q: The buildings insurance for my GP practice premises is up for renewal soon. I had an assessment for the reinstatement cost several years ago, however will this figure still be valid now to use for my new policy cover?

A: A Reinstatement Cost Assessment (RCA) should take place onsite by a specialist surveyor approximately every three years, or if any significant changes have been made to the property within that period, to ascertain whether anything has changed which may affect the value of the building for insurance purposes.

The figure submitted to the insurance company should not simply be the current market value of the property i.e. what you would put it on the market for to sell as in many cases this can be lower than the reinstatement cost, which could result in a deficit that the insurance company would not cover. A Reinstatement Cost Assessment calculates how much it would cost to demolish the property and completely rebuild to its current standard, and uses a number of factors such as construction type, size, condition, location etc. as well as items such as local authority and/or professional fees, in order to calculate the correct reinstatement cost.

The advantage of a Reinstatement Cost Assessment is that it will also include details of how long it would take to rebuild the property (rebuild period). This allows for contingency planning such as making alternative arrangements for the treatment of patients.

If insurance cover is taken out on a value that is too low it can result in a shortfall in the amount received in the event of a claim being made, or the even the claim being refused by the insurance company. On the other end of the scale, an inaccurate reinstatement cost can result in the overpayment of premiums if cover for a higher value than is needed is taken out, and therefore a good RCA is highly recommended.

If you have a question you'd like to ask one of our Surveyors, please do not hesitate to contact GP Surveyors. More information about Reinstatement Cost Assessments can be found here

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