Lorna Harrington, Director at Barrett, Corp & Harrington, answers one of the most commonly asked questions for the BCH team.
We are often asked ‘Why do we need a Reinstatement Cost Assessment?’. We know it’s rude to answer a question with another question, but we’re fascinated to know ‘Why wouldn’t you instruct a Reinstatement Cost Assessment?’.
An up to date RCA gives peace of mind in the event of any claim, large or small, and should allow your insurer to immediately focus on your claim- avoiding any costly delays, penalties or increased costs. It communicates to the insurer and loss adjuster that all aspects of the site have been assessed accurately taking into account the policy wording and are therefore insured.
Many of the policy wordings we see follow the RICS Reinstatement Cost Assessment of Buildings Guidance note (3rd edition, February 2018) which recommends a site based assessment and then ‘major reviews’ at regular intervals, yet we frequently attend sites that have not been reassessed in ten years or more – some never at all.
Having an up to date, RICS compliant RCA should mean that your insurance policy acts the way it is supposed to and allows for your building to be reinstated.
What is included in an RCA?
An RCA should include every aspect you’re insuring and that you would claim for.
Though the building itself obviously needs to be accounted for, there are additional reinstatement specific factors that can often be omitted.
In the event of a loss, the site would have to be cleared before construction can begin. Additionally, relevant permits and permissions have to be obtained. Not only are there a number of professional fees included in this, but these can add time to the construction programme, all of which need to be included in the final Sum Insured.
We have been challenged before on the inclusion of externals. There can be a ‘we’ll never lose it all at once’ mentality to insuring flat block developments. An RCA has to value everything on a total loss basis in order to be compliant, and a total loss mindset isn’t entirely outlandish.
In the event of fire loss to an apartment block for example, it is not unfathomable that the existing site roads and hardstanding areas might be damaged by large, heavy emergency services vehicles or plants required to clear the site. Smaller external structures may need to be removed to enable HGV access to site and boundary markers taken down to allow better site access.
Garages and bin stores should not be omitted, but allowances also need to be made for site roads, hardstanding parking areas and paving. External lighting, gates and barriers and any ramps between ground levels that may also need to be replaced in the event of a reinstatement, for example, should be included too.
Without an RCA, can you really be sure that all of these factors have been considered?
A site-based assessment gives the best accuracy for setting sums insured; ensuring all relevant items are included and valued accurately.
We’ve been providing the flats market with reinstatement cost assessments for almost 15 years now, and we still see underinsurance in 87% of cases.
With under insurance so rife and the impact of under insurance in a claim so detrimental, we’re still fascinated to know, ‘why wouldn’t you want to instruct a Reinstatement Cost Assessment?’.
