What Is The Reinstatement Cost Assessment (RCA) ?
The Royal Institution of Chartered Surveyors (RICS) states that an RCA is an ‘assessment of building reinstatement cost for insurance purposes’. The assessment is typically carried out by a qualified surveyor who calculates the cost to rebuild the property either on an elemental basis or by application of a rate per square metre calculated from building statistics.
Who Is Responsible For Insuring The Building?
The property owner and managing agents where appointed, may be responsible for ensuring an appropriate level of insurance cover is maintained on the property.
As a landlord you will want to protect your assets, one way to do this is through property insurance. When it comes to property insurance there are two separate valuations to use which dictate the amount of insurance. These are the property market value and its reinstatement value, and it is essential you see these as two different values.
The Property Market Value refers to the amount you will receive if you sell your property, whereas, the Reinstatement Value relates to the demolition and rebuilding costs of your property. If you rely only on your property’s market value and an expert reinstatement valuation is not carried out, you cannot be sure that the correct sums insured are in place – you could end up under insured.
What are Accurate Reinstatement Values?
Usually, a generic pricing table is used to calculate the reinstatement value. This generalises all buildings into set categories and gives a reinstatement value at a price-per-square-metre. However, your property could have completely unique needs and may not fit into a generalised category.
To create an accurate figure for your property’s reinstatement value numerous factors will need to be considered and assessed. Some of the factors to be considered can include:
- Older properties that contain asbestos: this will add considerable cost to any work required.
- Property locations: the nature of demolition work will depend on this.
- Regional differences: costs and availability differs in different regions of the country.
- Property design: while modern buildings are constructed cheaply and quickly, rebuilding them can cause problems.
- Listed buildings: which require specific techniques as well as materials during a rebuild.