We have compiled the most frequently asked questions into one handy FAQ page for your convenience.
Please feel free to contact us below if there is you wish to ask our team of RCA experts; they’ll be happy to assist you. Our full FAQ can be downloaded from here.
The reinstatement cost, or reinstatement value is what it would cost, hypothetically, to reconstruct a given building from scratch to modern day building regulations but keeping the visible exterior and standard of fit-out in the interior more or less the same.
The Declared Value (DV) is the full reinstatement value which is calculated by your surveyor conducting the RCA. The DV is the figure presented in the RCA report.
The Sum Insured (SI) is set by the insurer for the building, not the surveyor. The SI is the DV plus a provision for inflation which is typically 20% to 50% of the DV.
For instance, a DV of £5,000,000 as calculated by your RCA surveyor would become an SI figure of £6,500,000 after a 30% uplift as applied by the insurer. For the purposes of an RCA, you only need to think about the DV.
- Building Reinstatement Valuation
- Building Reinstatement Cost Assessment
- Insurance Valuation
- Insurance Rebuild Cost Assessment
- Fire Insurance Valuation
You may find other terminology used in older leases but Reinstatement Cost Assessment (RCA) is the most up to date description and certainly the one used by RICS.
If a policyholder is insured for a greater declared value than is necessary, the policyholder is overinsured. The main consequences of overinsurance is that the policyholder is paying too high a premium. Conversely, underinsurance refers to a situation whereby the declared value is too low. If this is the case, the insurer may refuse to pay a claim in full. Over or underinsurance is avoided through regular reinstatement cost assessments and engaging the right practitioner to yield accurate figures.
Index Linking is applied to the declared value by the insurer to make sure the building’s insured value (the declared value) is adjusted in line with inflation and the cost of living.
A desktop reinstatement cost assessment is one carried out without a visit to the building in question. The surveyor will use a variety of methods to estimate the reinstatement cost from behind a computer screen.
Yes. The insurance premium is the amount paid to an insurance for an agree level of cover. The premium paid is directly proportional to the declared value, so the higher the declared value, the greater the insurance premium.
All risks refers to comprehensive insurance coverage provided by an insurer, except those specifically excluded, which the insurer will list.
An excess is the amount the insured (the person who has taken out the policy) has to pay in the event of a claim.
A loss adjuster may be appointed by the insurer in the event of a claim and that person will validate the claim and advise the insurer. The loss adjuster will ascertain how much the claim should be for. A loss assessor is typically appointed by the person claiming (the claimant) to assist with the processing of the claim. Often a loss adjuster and a loss assessor will meet or correspond to reach a mutually satisfactory settlement.
Disclosure refers to the policyholder (the insured) informing the insurer of all relevant information and circumstances to allow the insurer to make a decision as to whether to insure or not, and if so, to calculate a premium. Non-disclosure, therefore, represents the failure of the policyholder to inform the insurer of relevant information, facts and circumstances that may have a bearing on the insurer’s appetite to insure the property and/or on the premium amount.
A peril can be used interchangeable with a ‘risk’ and refers to the cause of the damage to the property such as water ingress or fire.