Property Owners’ Insurance – Reinstatement Valuations
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How do I calculate the re-build costs?
Buildings are an asset and like any asset should be adequately protected. A property reinstatement valuation assesses the cost of reinstating the property to its original condition in the event of total destruction. It is extremely important to note that the market value of the property and the reinstatement valuation of the property are in no way linked.
The reinstatement valuation should typically include the following:
The reinstatement valuation should be carried out by a chartered quantity surveyor who has experience in the type of building sector that the reinstatement valuation is being calculated on. The valuations are initially prepared from the existing drawings. A site visit plays a critical part in preparing the assessment. This is not only important for establishing the existing specification, but ensures that all buildings within the site boundary have been captured and any material alterations since the drawings were prepared have been accounted for. Quite often the existing drawings and records are quite poor. We recommend that the site visit be undertaken with the building manager whose knowledge of the scheme should prove invaluable.
The re-build costs are based on the gross internal floor areas. The areas used should be stated in the reinstatement valuation. Existing tenant floor area schedules are a useful cross check. These should not be relied on in their entirety as quite often these are the net floor areas and do not contain the back of house areas, internal wall areas, public areas, malls etc.
A reinstatement valuation should also include the list of exclusions. For example, contents are normally identified separately and included elsewhere. Tenant fit outs, furniture fittings & equipment and shopfronts are normally excluded. These should be verified with the building owner. This ensures that there are no gaps or overlaps in their insurance policies.
It is important that reinstatement valuations are checked periodically to ensure that you are not over or under insured. Tender rates have been increasing steadily since they bottomed out in the second half 2010 / first half 2011 as per the SCSI Tender Indices. It is important that the reinstatement valuation on your property is up to date and that you are adequately insured.
Remember: the market value of the property and the reinstatement valuation of the property are in no way linked
Click here for more information on Property Owners Insurance with S.A. Faughnan
