Building Reinstatement Cost Assessments (RCAs) are a critical safeguard against underinsurance—but despite efforts from RICS-regulated suppliers like Cardinus, and industry professionals including freeholders, managing agents, insurers, and brokers, underinsurance remains alarmingly widespread.
📊 Our 2024 data reveals:
- 73% of RCAs referred by insurance partners were underinsured.
- Over 40% of those were underinsured by more than 60%.
- The most severe case showed a shortfall of £22 million on a single building.
These figures are more than concerning—they’re financially devastating. In the event of a claim, insurers will only pay up to the sum insured, leaving clients to cover the shortfall. That’s a risk no one wants to take.
⚠️ Common Causes of Underinsurance
- No professional valuation in the last three years
- Confusion between market value and reinstatement cost
- Outdated figures that ignore rising material and labour costs
- Overreliance on developer estimates, especially for new builds
💥 The Real-World Impact
- Insufficient funds to complete a rebuild
- Increased borrowing and financial strain
- Balance sheet damage
- Complex negotiations with insurers
- Frustrated leaseholders and tenants
- Delays in reconstruction
- Legal exposure from lenders and leaseholders
- Reputational harm
No party walks away from an underinsurance claim unscathed.
🛠️ RCA: On-Site vs Desktop—What’s Right for You?
While desktop RCAs offer a cost-effective alternative, they’re not always suitable. An on-site RCA includes:
- Full site walk-through
- Detailed measurements (per RICS standards)
- Sketch plans and digital imagery
- Documentation of peripheral features
- Comprehensive reporting
📉 Desktop RCAs use satellite imagery and rebuilding rates—but beware of potential pitfalls:
✅ Desktop RCA may be appropriate if:
- Satellite imagery is current
- No property changes in the last three years
- Standard construction with clearly defined footprint
- No underground features
- Mixed-use buildings needing only one overall valuation
❌ Desktop RCA may be risky for:
- Listed or historically significant properties
- Unusual shapes or construction methods
- Properties with basements or underground parking
- Mixed-use buildings with unclear boundaries
- Industrial units with hidden mezzanines or fixtures
- Waterfront properties with moorings or jetties
Also consider: Will your supplier back the desktop RCA with full Professional Indemnity cover, or will caveats leave you exposed?
✅ Final Word: Be Proactive, Not Reactive
Underinsurance is a silent threat—but one that’s entirely preventable. Regular RCAs from a professional, RICS-regulated provider are your best defence. Whether on-site or desktop, make sure your assessment is fit for purpose and fully backed.
🔍 Better safe than sorry—book your RCA today.
