Reinstatement Costs: What are they?

Understanding the correct insurance terms and amounts is crucial when it comes to buildings insurance. One term that often surfaces is the 'reinstatement cost'. But what exactly does this entail?

What Are Reinstatement Costs?

In simple terms, reinstatement costs refer to the total cost required to rebuild your home or property to its pre-loss or damaged condition in the event of a loss. This applies to more than just the bricks and mortar. It also considers fixtures and fittings, car parks, and landscaping.

Why is it Different from Market Value?

Often, homeowners mistakenly believe that their property's market value and the reinstatement cost are the same. The reinstatement cost might be higher than the market value, especially for older properties located in a conservation area or listed buildings.

Components of Reinstatement Cost Assessment

1. Building Cost: The primary component of the reinstatement cost. This accounts for materials and labour. Regular reviews are vital, given fluctuations in the price of materials and labour rates.
2. Professional Fees: Should you need to rebuild the property, you'd require architects, surveyors, and possibly legal advice. These fees are part and parcel of the reinstatement costs.
3. Debris Removal Costs: Post any loss or damage, removing debris is an essential first step before rebuilding can commence.
4. Reinstalling Facilities and Meeting Building Regulations: Rebuilding isn't just about erecting walls. It's also about reinstalling facilities, like central heating insured cover, and ensuring the new building complies with the latest building regulations.
5. Additional Costs for Special Properties: If your property is located in a conservation area or is a listed building, you might face other constraints and costs. Here, working with a qualified surveyor who understands the unique requirements and can give an accurate valuation is advisable.

Why is it Important?

Ensuring you have the correct insurance cover that accurately reflects your property's reinstatement costs is vital. A common pitfall for many homeowners is underinsuring their homes. This means that their buildings insurance covers might fall short of the actual rebuilding costs in the case of loss or damage.

How Do You Work Out the Rebuild Cost?

While you can find online tools supported by British insurers to give you a ballpark figure, the best approach is to consult a professional. A qualified surveyor can assess your property, considering the cost of materials, labour, and any unique features your home might have.

It's especially essential for homeowners of older properties or listed buildings. Such properties might have particular architectural features or use materials that are harder to source, influencing the buildings' sum. In such cases, a qualified surveyor's accurate valuation can be the difference between being adequately insured and facing financial challenges.

Final Thoughts

Remember, the building's declared amount should accurately reflect the cost to rebuild, not necessarily what you paid for your home or its current market value. Regularly reviewing your reinstatement cost assessment ensures that you're always adequately covered.

With fluctuating material prices, changes in building regulations, and other unforeseeable factors, it's paramount to keep your sum insured up-to-date. When in doubt, always turn to professionals, be it for a quote on home insurance or to gain an in-depth understanding of how best to safeguard your home.

If you need to make an insurance claim, do not hesitate to contact us, and one of our highly trained staff will be in touch to discuss your situation and explain how we can help.