23 Mar What are Reinstatement Costs?
Getting a property insured properly not only allows you to get a mortgage against its value, but also protects your investment and your wellbeing. If anything were to happen to the property, you would want to be protected financially from the costs. There are many things that surveyors take into account when inspecting a home to create a valuation for insurance purposes. One of these is the building’s Reinstatement Costs.
What do Reinstatement Costs cover and how are they calculated?
The Reinstatement Cost of your home is how much it would cost to completely rebuild the property if it were totally destroyed, for example by a fire. It is not the same as the value of your home, and covers the cost of materials and labour. Reinstatement Costs are for an accurate reconstruction of your property. They take into account the cost of finding the same materials (where possible) as were used in the original property and of undertaking the same or similar construction methods when rebuilding.
Reinstatement Costs also takes into account the cost of clearing the land ready for rebuilding to begin and reinstalling facilities such as central heating and double glazing.
Why do I need to know the Reinstatement Costs of my home?
It is important to find out how much your home would cost to rebuild it so that you can get the proper insurance. The last thing you want to happen is for you to insure your home for an amount below the Reinstatement Cost, and to only find this out in the unfortunate event of an accident. Your insurers will only pay out their portion of the costs – the Telegraph illustrates this well: if you home is worth £100,000 and you have it insured for £75,000, then your home suffers £50,000 worth of damage, you will only receive £37,500 from your insurers (source: The Telegraph).
You won’t be able to get a mortgage on a property until your lender can see proof that it has been properly insured. But rushing this stage of the process to speed up your application can result in you being insured for less than the value of your home. In the case of the above example, the last thing you want is to suddenly find yourself with no home and a large investment required to rebuild it.
How can I find out how much a property’s Reinstatement Costs will be?
To find out how much a potential property’s Reinstatement Costs will be, you should use a qualified surveyor. You will get an accurate valuation that your insurance company can use to determine the amount of cover you receive and the premiums that you pay. This keeps you protected in the future from any serious accidents that could destroy or dilapidate your home.
Having the right valuation is also important in order to get the correct insurance required before you get a mortgage. Contact Allcott Associates to find out your property’s Reinstatement Costs.
I need to make an insurance claim for reinstatement following fire, flood or subsidence damage. What should I do?
For any significant claim, your insurance company will appoint a loss adjuster to look into the details of the claim and manage the claims process. Loss adjusters often require professional experts to support them with recording the extent of the damage and the work that will be required to put it right, and to project manage the repairs. Surveyors are often employed in these roles and oversee the entire process, from an initial assessment of the damage, to finding contractors (a process known as competitive tendering) to monitoring and signing off the works.
If your loss adjuster has asked you to find a surveyor, or if you would like exercise your right to appoint your own surveyor to work on your behalf, Allcott Associates Residential can help.
Our commercial team also works directly with loss adjusters, offering expert contract administration for fire, flood and subsidence claims.