Zoe Davenport from Barrett Corp & Harrington advises
Understanding the origin of the rebuild value in an insurance policy is essential, as is keeping it maintained. The only way to be sure of an accurate sum insured is to instruct an RICS compliant Reinstatement Cost Assessment (RCA) in the first instance and then review this figure annually until a “major review and reassessment” is required, three years after the initial RCA.
The RICS RCA Guidance Note (Edition 3-2018) identifies best practice for reviewing these sums as follows;
“It is prudent to incorporate recommendations within the report to the effect that the client needs to reassess the sum insured on a regular basis, with an annual adjustment to reflect inflationary effects, and a major review and reassessment every three years, or earlier should significant alterations be made to the insured property.”
But what constitutes a “major review”?
When BCH conduct the initial RCA, all the necessary building specification and site factors are considered to enable calculation of an accurate rebuild value. Provided no significant alterations have been made to the building, such as extensions, deletions, structural alterations or, significant change of use, BCH are able to carry out a desk top review (DTR) of the rebuild value using updating construction rates and site considerations, which verifies whether the indexation applied by insurers, has been appropriate.
Subject to the above criteria, a 3rd year DTR by BCH, addresses the RICS “major review” wording and the majority of brokers and insurers will now accept this “major review” as satisfying the criteria for waiving the Average Clause (underinsurance leading to proportionate settlement) on their policies. The effect of this is to extend the time between the requirement for site-based assessments.
Although policyholders should verify this to be the case with their insurance advisers, a DTR can remove the requirement for a site-based assessment by up to 6 years from the date of the original survey.
It is always best to think about the need for assessments a few months ahead of the insurance renewal date so when the 6 years is nearly up BCH recommends the site be revisited. For this fully compliant service, given the familiarity with the property and reflecting returning customer loyalty, significant discounts are available.
The combination of BCH’s competitively priced full site-based RCAs and DTR service represents excellent value for money to our customers by reducing the lifecycle cost of their RCA programme.
For more information visit the website or call the office 01455 293510.
