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Understanding Insurance Reinstatement Valuations 

Understanding Insurance Reinstatement Valuations 

2 minute read

As a property owner or landlord, ensuring the protection of your investment is paramount. A key component of safeguarding your property is calculating your property’s insurance reinstatement valuation.  

This article will give you a better understanding of what insurance reinstatement valuations are and why it is crucial to protect your property. 

What is an Insurance Reinstatement Valuation? 

An Insurance Reinstatement Valuation is defined as the process of valuing the cost to rebuild or replace property in the possible event of damage or destruction. This figure reaches beyond market value, as it represents the price of solely restoring the property to original condition. This price takes into consideration labour, materials and any other associated fees. 

Why is it Important? 

Calculating the correct reinstatement valuation ensures you have accurate insurance coverage. If underinsured, the property may be subject to significant out-of-pocket expenses if a rebuild is needed.  

Additionally, insurance policies often require property owners to insure their properties up to a certain reinstatement value. If you fail to meet this requirement, this may result in an invalidation of the policy or reduced pay outs.  

It is also important to avoid underinsurance, which is a common issue faced, where the insured amount is less than the reinstatement cost. This can cause proportionate reductions in insurance claims and leave you in the dust with insufficient funds to rebuild your property. 

Lastly, having peace of mind that your property is covered, in the possibility of an unfortunate event, means that you can fully focus on recovering your loss without the stress of financial constraints.  

How is Insurance Reinstatement Valuation Calculated? 

  1. Construction Costs

This includes the materials used, labour costs, and the current construction costs in your area. Naturally, rebuilding with high-quality materials will incur a higher cost. 

  1. Architectural Features

Any unique or intricate features in the property will increase the reinstatement value. This includes things like historical restoration or specially crafted features.  

  1. Site Conditions

This considers the location, accessibility of your property, as well as site condition such as any slope or soil type that would have a knock-on effect on construction costs.  

  1. Regulations and Permits

Compliance with building codes and any necessary permits will add to the overall cost of the valuation. Changes in regulations can also affect the cost of rebuild.  

Understanding insurance reinstatement valuations is fundamental for property owners and landlords, as well as regularly reviewing and updating insurance policies to reflect the current reinstatement value of the property. By investing in accurate coverage, you not only secure your investment but also guarantee a swift recovery in the face of unforeseen adversities. 

At BPS, our dedicated team are committed to delivering honest reinstatement cost solutions that you can rely on. 

Get in touch with us today for more information or to book a free consultation.