Building Reinstatement Cost Assessments (RCAs) are essential for mitigating underinsurance risk. However, like any other valuation process, the information they provide is static – a snapshot showing the rebuild value of your property when the assessment took place.

Several factors can influence the reinstatement cost of your property, even over quite short periods. This means RCAs shouldn’t be a one-time investment, but a regular fixture of an on-going plan to protect your property and finances.

Keep reading as we discuss how often you should plan a RCA to ensure consistent, sufficient insurance coverage – as well as peace of mind.

How long are RCAs valid?

An accurate RCA is considered valid for three years. At this point and in line with RICS (Royal Institution of Chartered Surveyors) guidance, a major review should take place and a new rebuild cost should be calculated based on current factors.

Within these three-year periods, it’s recommended that you regularly reassess the sum your property is insured for and to make slight adjustments to account for inflation.

Another consideration is that your insurance company may also ask you to obtain a professional valuation every three years in order for ‘Average’ to be waived on your policy. The ‘Average’ clause is used by insurers to adjust claims relative to the level of underinsurance. In simple terms, the amount you receive is reduced in proportion to the degree you are under-insured. If the property is a total loss, then the most you can receive is the sum insured.

Does that mean I need a RCA every year?

For optimal security, some form of revaluation should take place annually. This can be a daunting prospect, but, fortunately, there are ways to minimise the fees associated with regular building insurance reinstatement cost assessments:

Make use of our RCA service

Cardinus offers both on-site and desktop reinstatement cost assessment services. While it’s best to begin the process with a comprehensive in-person assessment, desktop RCAs are an affordable way to revalue build costs at yearly intervals.

Carried out remotely using state-of-the-art technology and reliable data sources, desktop reinstatement cost assessments are convenient, efficient and cost effective method of assessing simple buildings.

Keep detailed records of any changes to the property

The more information you can offer about your property’s current state and how it has changed since the last major assessment, the more streamlined the revaluation process is, keeping expense to a minimum.

What could alter my rebuild value between RCAs?

Like market value, rebuild value is dynamically determined by several changeable factors. Let’s explore the main ones.

Changes to property structure

As RCAs focus primarily on the structural elements of your property, should the structure change, so too will your rebuild value.

For example, you might extend your property between RCAs, increasing the rebuild value by an unknown amount. Until you seek a new valuation, you won’t be able to adjust your insurance to ensure full coverage.

Shifting economy

Economic factors can significantly influence rebuild costs, even if your property itself hasn’t changed.

The cost of materials, labour, and services can fluctuate due to inflation, changes in supply and demand, or economic policies. For instance, if there’s a surge in construction demand or a shortage of materials, rebuild costs may skyrocket, leaving you underinsured if your RCA isn’t up to date.

Advancements in building regulations and standards

Building codes and regulations are subject to change over time. As new standards are introduced or existing ones are updated, the cost to rebuild your property to comply with these regulations can increase.

For example, stricter fire safety measures or energy efficiency standards might require more expensive materials or construction techniques, impacting your property’s rebuild value.

Technological upgrades and innovations

The incorporation of new technologies into building materials and methods can affect rebuild costs.

Innovations in smart home systems, energy-efficient installations, or sustainable building practices may increase both the value and the cost to restore your property. These advancements often lead to higher upfront costs for materials and specialised labour.

Environmental factors and natural disasters

Environmental changes and the increasing frequency of natural disasters can influence rebuilding costs. Properties in areas prone to flooding, earthquakes, or severe weather may face higher rebuild costs due to the need for more robust construction methods or disaster-resistant materials.

Additionally, post-disaster inflation in the construction industry can drive up rebuild costs dramatically.

Changes in local construction market conditions

Local construction market conditions can vary widely, affecting labour availability and pricing.

For example, if there’s a construction boom in your area, labour costs may rise due to increased demand, which could, in turn, raise the rebuild cost of your property. Additionally, regional differences in regulations, material availability, and other factors can influence local rebuild costs.

Keep on top of underinsurance with Cardinus

Cardinus is a RICS-regulated provider, backed by a team of highly experienced assessors who operate nationwide, bringing valuable local knowledge to every project. We leverage the latest technology to ensure our RCAs are accurate, efficient, and cost-effective.

Don’t leave your property’s insurance to chance, contact us or email [email protected] to hear how we can safeguard your property against underinsurance.