Reinstatement cost assessments: what they are and why they matter

If the worst happens and your home is damaged beyond repair, your buildings insurance needs to cover the full cost of rebuilding it. Getting that figure right is more important than many owners realise, and a reinstatement cost assessment (RCA) is how you establish it accurately.

A reinstatement cost assessment, sometimes called a rebuild cost appraisal or insurance valuation, is a professional calculation of the total cost to completely reconstruct your property. This is distinct from the market value of your home, which reflects what a buyer would pay rather than what it would cost to rebuild. It covers labour, materials and any specialist requirements specific to the building.

An RCA is carried out by a chartered surveyor and is used primarily to ensure your property insurance adequately covers you in the event of total loss. If your property is underinsured, you could face a significant shortfall when making a claim. This applies equally to residential properties and commercial buildings, where the gap between market value and rebuild cost estimates can be especially wide.

A reinstatement cost is often included in a homebuyers survey report, particularly in a RICS Level 2 survey or Level 3 survey. When buying a property, the surveyor may provide a current reinstatement cost figure as part of their assessment, giving you the information you need to set your buildings insurance at the right level from day one.

For buyers of commercial properties or buildings with non-standard construction, a standalone reinstatement cost assessment is often the more appropriate route providing detailed valuations that a standard survey report may not cover in sufficient depth.

Chartered surveyors follow clear standards when carrying out a reinstatement cost assessment. These cover:

• establishing at the outset that the assessment is for insurance purposes
• defining what is and is not included
• specifying which fixtures and contents are covered
• defining the extent and boundaries of the property
• incorporating any specific exclusions
• setting a base date from which the assessment is calculated
• taking account of background information such as original plans and any extensions
• clarifying what "new for old" means in the context of the specific building

These requirements exist as part of broader risk management practice, ensuring that property owners and insurers are working from the same accurate figures.

Build costs do not stay still. In the years following the Covid pandemic, the cost of materials rose considerably due to supply chain disruption and wider inflationary pressures. These changes mean that a reinstatement cost assessment carried out several years ago may significantly understate what reconstruction would cost today.

This is why owners of both residential and commercial properties should commission a fresh reinstatement cost assessment periodically particularly when renewing buildings insurance, to ensure cover remains in line with current estimates and the total cost of a full rebuild.

Surveyor Local works with RICS chartered surveyors across England and Wales. If you need a reinstatement cost assessment for a property you are buying or already own, get a no-obligation quote online or call our friendly team on .