What is a Building Reinstatement Cost Assessment?

In its simplest terms a Building Reinstatement Cost Assessment report or a BRCA provides an accurate assessment of the likely cost of demolishing and reconstructing a property in the event of a total or partial loss, such as in a major fire.

Most commercial property insurers require a financial sum to be disclosed for the rebuild cost of the property, and this amount will be factored in when pricing a policy. In these inflationary times where everyone is looking to save on costs it may be tempting to provide a lower figure or understate the reinstatement cost to reduce the policy cost but this can be a false economy and have serious consequences.

Why are BRCA’s important?

An accurate and up to date BRCA enables the individual or company responsible for the insurance of a property to ensure that it is adequately and accurately insured.

Recent construction cost inflation over the last 18 months has drastically increased the cost of building work which has resulted in large numbers of buildings being significantly underinsured.

What are the consequences of an inaccurate BRCA?

There can be serious consequences if a property is inaccurately insured.

If a property is over insured, the insurance premium will likely be more expensive than necessary. Over a large portfolio of properties, the unnecessary costs of over insuring or the risk of under insuring can be a significant issue.

Conversely, if a building is under insured, in the event of a claim for reinstatement the policy may not pay out a sufficient sum to rebuild the property which may leave the business or occupier unable to continue trading or leave such a shortfall that rebuilding is not feasible.

Complications can arise in calculating the building reinstatement cost for unusual or complex properties, such as listed buildings, mixed use properties and properties in remote locations.

Rent cover and business interruption cover are also linked to reinstatement cost assessments, it is important to carefully estimate the time it will take to rebuild a severely damaged building to ensure that sufficient levels of rent cover and other associated looses are also covered.

Expert advice and added value from Sanderson Weatherall

Thankfully, SW have extensive experience across all sectors of commercial and industrial property and can provide accurate BRCA’s using the most up to date industry pricing information all backed by our comprehensive Professional Indemnity Insurance cover.

We have provided BRCAs for a wide range of property types including city centre tower blocks, factories, retail and showrooms, and we have even reported on a 200 year old lighthouse!

To add further value, we can provide expert valuation advice for all types of plant and machinery within commercial properties, such as factories, manufacturing facilities and advanced warehouses.

We always offer an initial conversation and a review of your property matter on a free of charge basis, so don’t delay, contact one of the team today to discuss your building, plant, and machinery insurance queries today.