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What is ‘reinstatement or rebuild’ value?

by Juliet Allan on September 29th, 2011

Gareth Cotton, Private Client Account ExecutiveReinstatement value refers to the value of reconstructing your home, including all of its features, using materials which are as similar as possible to what’s currently in place.

Establishing an accurate reinstatement value is incredibly important as any miscalculation can lead to a claim settlement which will not fully pay for the rebuilding of your property. If your property is listed and your building is under-insured this could lead to you personally being liable to fund the difference. Wouldn’t you prefer to spend the extra amount to insure to the correct value rather than potentially having to find hundreds of thousands of pounds to pay the difference?

I frequently find myself explaining why it’s so important to insure with a company who truly understands period and grade listed properties. When it comes to period properties, repair and restoration costs are likely to be higher than for modern homes. Unique building materials such as wattle and daub, intricate cornicing and feature fireplaces will all require specialist craftsman to reinstate them. Many insurers will insist on using their own contractors to carry out the work which will potentially lead to more problems as those individuals won’t have the necessary skills to do the job. Under all of the contracts we administer you can source a suitable tradesperson to carry out the work and this is a key feature of these types of policies.

Finding the correct reinstatement value is a complex affair. Type and quality of materials used, the properties accessibility, age, listed status, along with external measurements of the property are all taken into consideration. In addition to the cost of the materials, valuations also need to take into account fees to employ architects and various contractors. That’s why plucking a figure from thin air isn’t advisable or even using non-specialist surveyors as the figures they place on properties can be markedly different than their specialist counterparts.

A lot of the time people ask ‘Why can’t we insure for the market value?’ . The market value of a property can be influenced by factors such as the properties’ location, surrounding landscape and its proximity to key services such as schools and shops. It’s also worth bearing in mind that the market value of a property in certain areas, such as a city centre, may be much higher than the actual rebuild cost. Getting the correct rebuild cost from the outset can save you money!

The cost of having surveys done can vary. If your rebuild cost is over £1,000,000 then usually the insurer will conduct an appraisal free of charge as part of the contract. We can also arrange surveys on your behalf through our specialist contacts these include both desktop valuations and full appraisals.

Please do get in touch if you have any questions or for more advice.

Gareth Cotton, Private Client Account Executive.

E: or
T: 01223 200665

La Playa Private Clients: Insurance with Intelligence

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