Frequently Asked Questions About Rebuild Cost Assessment

If you underinsure your property, your claim settlement may be reduced. This is because the Average Clause may apply, depending on your policy wording. So don’t guess and gamble with your insurance policy. This page answers some frequently asked questions about property valuation for insurance purposes, the Average Clause and some other intricacies of Rebuild Cost Assessment.

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Frequently Asked Questions

If you need help with assessing the reinstatement value of your property, please call us. Our fully qualified Chartered Building Surveyor can provide you with a professional assessment for insurance purposes, to help you review whether your buildings sum insured is appropriate.

Here are some frequently asked questions. If you have a query, be safe rather than sorry and give us a call.

Who Carries Out a Reinstatement Cost Assessment?

A rebuild cost assessment is undertaken by an appropriately qualified Chartered Surveyor.

A rebuild cost assessment determines the estimated cost of reconstructing your property if it were damaged or destroyed. This ensures the property is adequately insured, covering all materials, labour, professional fees, and compliance with current building regulations.

A market valuation is what you could expect to buy or sell the building for. This varies with market demand, location and other factors.

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 higher market value, but the rebuild costs would be very similar to the side street less prominent premises. If you base rebuild cost on valuation the corner site is possibly overinsured and the side street site underinsured.

If your building is destroyed and the insurance is insufficient, you will need to make up the difference.

Assuming your property is totally destroyed and your insurance only covers 50% of the cost to rebuild your premises, your claim settlement may be reduced to 50%, depending on the policy terms.

The Average Clause may also apply to partial losses. If your building was only half destroyed, you may assume you are covered; however, as the building was only half insured, the claim may be reduced in proportion.

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.

An RICS Chartered Surveyor will calculate the rebuild cost of a property taking into account numerous factors, such as:

  • Type of building (e.g., block of flats, detached, semi-detached or terraced)
  • Whether commercial or residential materials are used
  • Labour costs
  • Professional fees (e.g., 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, such as drainage, electrical and mains water services, which may affect neighbouring buildings
  • VAT on materials and services

 Yes, we carry out desktop assessments in certain scenarios. However, they are not regulated by the RICS. If you want to discuss further, please give us a call.

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