Are You Underinsured? Why now is the right time to conduct a Reinstatement Cost Assessment.
If you had to rebuild your home tomorrow, would your insurance cover the true cost? Are you underinsured?
With construction costs in the UK continuing to rise, many homeowners are finding their existing insurance cover is no longer enough. A Reinstatement Cost Assessment (RCA) ensures your property is insured for the actual cost of rebuilding – not just what you think it might be worth.
Why the rising cost of building matters
Construction costs have surged in recent years. Forecasts from BCIS suggest building costs will rise by around 14% over the next five years, with tender prices climbing by a similar margin.
Material inflation is a major driver. The UK Construction Materials Price Index is projected to grow at over 6% per year, and since 2015 the cost of core building materials has risen by around 60% – far outpacing general inflation. Even where some prices have dipped slightly in the past year, costs remain significantly higher than they were just a few years ago.
This means a rebuild today could cost substantially more than your last insurance assessment allowed for. If your cover hasn’t kept pace, you could be left underinsured – and forced to cover part of the rebuild yourself should the worst happen.
What is a Reinstatement Cost Assessment?
In simple terms, we should insure our property for how much it would cost to replace the building should it be destroyed due to a disaster. The cost of replacing the bricks and mortar and associated labour costs, minus the cost of the land.
It is our responsibility as property owners to insure it for the correct amount.
Even if you start off with the correct amount of cover, many building insurance policies are index-linked and you end up grossly over-insuring the property. If you are overinsured, you are paying too much for your buildings insurance.
Many of us take out insurance and do not review it very often. If you are underinsured, you will only get a proportionate payment of the rebuild costs, not the full amount. In this instance, you may well end up having to pay toward the cost of replacing the building.
An RCA is an independent valuation carried out by a qualified RICS surveyor. It calculates the full cost of demolishing and rebuilding your property from the ground up, including:
Demolition and site clearance
Labour and professional fees
Building materials and compliance with current building regulations
It’s not the same as market value. Market value reflects what a buyer would pay for your home, while reinstatement cost focuses solely on what it would cost to rebuild.
How often should you update your RCA?
RICS recommends reviewing your insurance sum every year and commissioning a full RCA at least once every three years. You should also update it if you’ve carried out extensions, loft conversions or major refurbishments, as these all increase rebuild costs.
Protecting your property and your finances
Getting an RCA done isn’t just a box-ticking exercise for insurance. It’s about protecting what is probably your biggest asset and avoiding unnecessary financial stress if you ever need to make a claim. Being over-insured is just as wasteful – it means you’re paying more in premiums than you need to.
Why use a surveyor?
There are many online rebuild cost calculators. This is fine if your property is in an average priced area, hasn’t had any major renovations or alterations and is not part of a more complex situation involving adjoining buildings or is unusual construction type or listed building.
Most of London and the South East have older larger properties split into flats, often with a share of the freehold where the responsibility of insuring the building is down to individuals. Not only will this be harder to calculate accurately, but you may also have a legal implications from neighbours if you get it wrong.
To ensure you are not exposing yourself to any of the above pitfalls, protect yourself and get professional advice.
Why choose Barnes & Barnes?
Over 20 years’ experience surveying London homes
Independent, RICS-registered surveyors
Accurate, reliable assessments you can trust
Friendly, straightforward service
At Barnes & Barnes, we make the process simple and stress-free, giving you peace of mind that your property is properly protected.
To book your Reinstatement Cost Assessment, call us on 0207 737 7243 or get in touch online.
