A Reinstatement Cost Assessment (RCA) is used to calculate the potential cost to rebuild a structure and provide a ‘day one’ reinstatement figure, known as the declared value.
Whether you own a single property or a wide ranging portfolio, most insurance underwriters require a professional evaluation and it is essential for commercial property owners and / or their agents to arrange regular assessments of their building(s) to ensure they are adequately insured in the event of fire or other insured perils.
A Reinstatement Cost Assessment (RCA) is the basis adopted by the Royal Institution of Chartered Surveyors (RICS) for undertaking an appraisal of property for insurance purposes.
Most commercial buildings in the UK are insured on a reinstatement basis, i.e. new for old. The term reinstatement indicates to repair, reconstruct or renew to a condition equal to but no better than when new.
Such an assessment can often include inspection and reporting on a wide range of property types and sizes taking into account factors and features specific to each.
When undertaking a Reinstatement Cost Assessment it is important for each property to be assessed on a building by building basis.
All buildings need to be inspected by a qualified surveyor to calculate the Gross Internal Area (GIA), record key data and assess:
The extent and layout of the property.
The age of the property’s buildings.
The surrounding environment and any restrictions.
Presence of any potential deletrious materials.
The extent and type of building services provided.
Type and use of the buildings.
Any external areas, boundaries, etc.
Any special features.
The declared value is the sum representing the assessment of the cost of reinstatement and includes allowances for:
The sum insured must allow for the cost of rebuilding the destroyed property or restoring the damaged section of the building to a similar condition, when new.
Over-estimating the cost of reinstatement can lead to excessive premiums. Whilst being under insured would mean insufficient funds are available to reinstate the property, which can have a significant and wide ranging impacts.
We would recommend that a complete RCA is carried out every three years with desktop evaluations carried out annually, with cost amended in line with Tender Price Indices (TPI’s) and data from the Building Cost Information Service (BCIS).
If there are any significant changes or alterations we would also recommend a Reinstatement Cost Assessment should be carried out in full to ensure adequate insurance cover is in place.
At Roger Hannah our qualified surveyors work across all property sectors, combining out technical skills and surveying resources to provide Reinstatement Cost Assessments (RCA) for both one-off and larger property portfolios, with nationwide capability.
Our RCA’s are carried out in accordance with current RICS guidance and professional standards (RICS, Reinstatement Cost Assessments of Buildings, 3rd edition). Using on line cost information from the Building Cost Information Service (BCIS) to provide up-to-date and accurate RCAs.
We also offer expertise in portfolio management, designed specifically for asset managers requiring ongoing and active RCA management.
