Reinstatement cost assessments are key to accurately insuring a building. They determine the full cost of completely rebuilding a property from the ground up, including site clearance, labour and materials.
Inaccurate assessments can lead to under or over insurance. One results in a property that is not fully covered in the event of disaster, while the other can lead to unnecessary costs for residents and invalid claims.
Here we will explain the key differences between a remote, “desktop” assessment, and an in-person assessment, with the aim of arming Residents’ Management Company directors with an understanding of which is appropriate for them.
Desktop vs Onsite – What Are The Differences?
A desktop valuation is completed remotely using publicly available data, including:
- Floor plans
- Google Earth imagery
- Property databases
The surveyor does not physically visit the site, but makes assumptions based on digital resources.
An onsite valuation involves a qualified surveyor visiting the property in person. They assess the structure, materials, measurements, layout and any unique features or risks that would affect rebuild cost. This method is more thorough and tailored to the property as it stands in present day.
While desktop RCAs are faster and cheaper upfront, onsite valuations offer a significantly higher degree of accuracy and detail.
The Risks of Relying Solely on Desktop Valuations
For small or relatively standard properties, a desktop RCA may seem convenient, but reliance on the cheaper option can be risky.
Desktop assessments use generic construction data, which leaves assessors open to assumptions and generalisations. They can overlook bespoke features that could increase rebuild costs. Online sources may also reflect previous layouts, ignoring extensions and modifications.
Inaccurate figures create a higher chance of an inaccurate sum insured. This leads to underinsurance, which can result in claims being reduced proportionally (known as the ‘average’ clause). For example, if your block is insured for £2 million but should be insured for £2.5 million, you may only receive 80% of any claim, even for partial losses.
The Benefits of Onsite Valuations
On-site surveyors can properly measure the Gross Internal Area (GIA), avoiding reliance on outdated or incorrect plans. They can account for materials used, architectural features, bespoke finishes and unusual construction methods – all of which can affect costs.
An in-person surveyor may spot issues or risks (such as structural alterations, deterioration, external cladding etc), not visible on satellite images. Onsite valuations are more likely to meet the expectations of insurers and brokers – reducing the risk of claim disputes.
Put simply, if you want an RCA that reflects the true cost to rebuild your block, an onsite valuation is the gold standard.
Is a Desktop RCA Ever Appropriate?
There are some scenarios where a desktop assessment may be appropriate, including:
- As an interim update between full onsite assessments
- For newer, standard-construction buildings with no modifications
- Where insurers explicitly accept a desktop valuation for low-risk properties
However, even in these cases, RMCs should treat desktop RCAs as short-term guidance and not a substitute for a full onsite inspection.
Best Practice for RMCs
- Commission an onsite RCA every 3-5 years
Most insurers recommend an onsite valuation at least every five years, or sooner if there have been changes to the property. This ensures your sum insured keeps pace with inflation, regulations and property alterations.
- Use qualified professionals
Engage a RICS-certified surveyor with experience in leasehold and block management. Professional credentials will ensure the valuation is carried out in line with industry standards.
- Document and share the assessment
Keep a copy of the report and share it with your broker or insurer when arranging cover. This demonstrates due diligence and provides a reliable basis for the sum insured.
- Update your RCA following significant works
If your block has undergone renovations, extensions, or major upgrades, always reassess the reinstatement value. An updated RCA ensures your insurance reflects the current condition.
- Do not wait for your insurance renewal
Underinsurance can impact claims even mid-policy. If you suspect your building is undervalued, commission an updated RCA immediately.
The Financial Impact of Underinsurance
The consequences of underinsurance can be severe. Insurers may apply the average clause, reducing payouts in line with the underinsurance ratio, and disagreements about the sum insured can delay settlements and lead to legal costs.
Any shortfall may need to be covered by the RMC or passed to leaseholders via service charges. Some leases explicitly require the building to be insured for its full reinstatement value. Failure to do so could breach lease terms.
In short, cutting corners on RCAs to save a few hundred pounds could end up costing thousands in the event of a claim.
Final Thoughts
Choosing between a desktop and onsite reinstatement cost assessment is about more than convenience. It is about protecting your block, fulfilling your legal obligations, and ensuring financial peace of mind.
While desktop RCAs have their place, they should never be the sole basis for long-term insurance decisions. A professionally conducted onsite valuation provides the most accurate and defensible figure for rebuild costs and is essential for responsible RMC management.
If your current RCA is more than five years old or based on desktop estimates alone, now is the time to act. A little investment today could protect your building (and your leaseholders) from a very big problem tomorrow. Request a quotation today.
