Having adequate insurance cover for your commercial buildings is vital, whether your investment is a single building or you’re managing a larger portfolio. Not enough insurance can leave you financially exposed in the event of a claim, particularly in the event that you have to rebuild the property, which can have potentially disastrous consequences. Too much cover means you’re paying over the odds for your building insurance. But the risk of both overinsurance and underinsurance can be avoided with a Reinstatement Cost Assessment (RCA).
At Bradley-Mason, we conduct professional and impartial assessments according to the latest practice standards from the Royal Institution of Chartered Surveyors (RICS), using RICS Guidelines for RCA of Buildings and online cost information from the Building Cost Information Service (BCIS) to allow us to produce an RCA with a high degree of accuracy.
What is a Reinstatement Cost Assessment?
RCA is the basis on which Chartered Surveyors conduct appraisals of commercial property, plant, machinery and contents for insurance purposes. Most UK commercial buildings are insured on a reinstatement basis, meaning new for old. Thus, the reinstatement cost of a building means a repair, reconstruction or renewal of the asset to a condition that is equal to but not better than new. It’s a comprehensive assessment that often involves the inspection and reporting on a wide range of properties of varying types, sizes and uses.
How frequently should an RCA be conducted?
Carrying out a Reinstatement Cost Assessment to determine the value of the asset is the only way to ensure that the correct level of insurance cover can be put in place. With that in mind, and in line with RICS recommendations, we would advise that a full RCA be carried out every 3 years, alongside supporting annual desktop evaluations with costs amended based on Tender Price Indices (TPIs). If any significant alterations are made to the property, or additional investment or downsizing in plant, machinery or contents has occurred, a reassessment should be conducted in full to ensure that appropriate insurance cover is in place.
How is a Reinstatement Cost Assessment carried out?
Undertaking an initial RCA for insurance purposes requires a physical inspection of all areas of the property by a qualified surveyor. Schedules of buildings, main plant and machinery/contents will be undertaking during the site visit and building plans, health and safety documentation and other information about the building’s size, age, construction, location and services may also be required. BCIS published data, information supplied by machinery manufacturers and agents, internet research and internal databases are all used in the calculation. The more information we have, the more accurate the RCA will be. Subsequent RCAs may be conducted without the need for a physical visit
What happens in the event of a claim?
Should the worst happen and an insurance claim is made on the policy, the building’s reinstatement cost estimate is called on to inform the likely insurance payout. In addition, the insurer will appoint a loss adjuster to assess and manage the claim in detail. A surveyor may also be instructed to assess the extent of the damage and invoices in the reconstruction process, making sure the building is appropriately reinstated. At Bradley-Mason, our project management team has developed a specialist service to rapidly assess building damage as a result of flood, fire or vandal attack, prepare an outline feasibility for the work required to agree with the loss adjuster, and specify, tender and project manage the repair work to minimise the impact on our client’s business.
How can Bradley Mason help?
If you require independent professional advice on Reinsurance Cost Assessments for your commercial premises anywhere in the UK, the experienced team at Bradley-Mason LLP should be your first port of call. We have many years’ experience in surveying all kinds of commercial property across many sectors, ranging from small office premises to large multiplex cinemas and wide-ranging residential portfolios.
Call us on 01423 611 604 or email us at info@bradley-mason.com to discuss your RCA requirements with our expert team.
DISCLAIMER: This article is for general information only and not intended as advice. Each project has its own set of unique circumstances, all potential issues should be investigated by a surveyor on a case by case basis before making any decision.