If you underinsure your property, you will only get paid out a fraction of the actual rebuild cost, when you file a claim. This is because the insurers work according to the Average Clause. So don’t guess and gamble with your insurance policy. This page answers some of the Frequently Asked Questions about property valuation for insurance purposes, an Average Clause and some other intricacies of Rebuild Cost Assessment.
Frequently Asked Questions
If you need help with assessing the reinstatement value of your property, please call us. Our fully qualified rebuild cost valuator can provide you with an accurate value for insurance purposes, so you can have peace of mind that your asset is fully covered.
Here are some frequently asked questions. If you have a query, be safe rather than sorry and give us a call.
Who does a rebuild cost assessment?
A rebuild cost assessment is undertaken by a RICS approved chartered surveyor .
What is a rebuild cost assessment?
What is a Building Valuation?
A building valuation is what you could expect to buy or sell the building for this varies with demand exact location etc.
Why is confusing valuation and rebuilding cost bad?
Imagine two very similar buildings one on a prime corner site and one six buildings away down a side street. The corner site can fetch a premium price “valuation” but the rebuild costs would be very similar to the side street non premium premises. If you base rebuild cost on valuation the corner site is possibly over insured and the side street site underinsured.
What happens if my property is underinsured?
If your building is destroyed and the insurance is insufficient you will need to make up the difference.
What is the insurer’s average rule
Assuming your property is totally destroyed and your insurance only covers 50% of the cost to rebuild your premices, you will only get 50%. Seems fair?
But also if your build was only half destroyed, you may think you are covered, think again. The averaging rule means as you were only half covered any claim will only be half covered.
To put it bluntly:
- Your building is insured for €500,000, but it should be insured for €1,000,000, meaning that you are underinsured by 50%.
- You make a claim for €100,000 but because you were underinsured by 50%, the insurer only pays you 50% of the claim which is €50,000.
How are property rebuild costs calculated
A RICs surveyor will calculate the rebuild cost of a property taking into account numerous factors, such as:
- Type of building (eg. block of flats, detached, semi detached or terraced)
- Whether commercial or residential materials are used
- Labour costs
- Professional fees (eg. solicitors, surveyors)
- Demolition and site clearance
- Removal of other structures on the land (such as garages, sheds, orangeries, greenhouses, pumping stations or pool rooms)
- Repair to services, sewage, electric, mains water, which may affect neighbouring buildings
- VAT on materials and services
Is a Desktop Assessment available?
Yes we do carry out desktop assessments in certain scenarios however as they are not regulated by the RICS. If you want to discuss further, please give us a call.
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