If you own property, no matter what size or for what purpose, you need to ensure you’re insured to the right level should anything happen. This is where we come in. A BRCA refers to a Building Reinstatement Cost Assessment (BRCA), often known just as a Reinstatement Cost Assessment.
Giving your insurers a rebuild figure for your property is not as simple as it may initially sound. If you’re underinsured, you could face a significant shortfall in funds to cover costs in the event of a claim, and if you’re over insured you’ll likely be spending a lot more than needed on insurance premiums. The former is becoming more prevalent in the current market, which has seen significant rises in materials and labour costs, leaving many proper owners at risk.
In fact, recent research has found that 80% of UK properties are under-insured – to put that in context, that’s around 587,000 high net worth homes and commercial property with a total value of £340 billion standing without adequate buildings insurance.
The first thing your insurer will do when you make a claim is check the building is insured for the correct amount. In the event your property is underinsured, many insurance policies will typically revert to what is often referred to as an “averaging” clause.
This generally means the final payout of any claim will be reduced by the degree to which the property was underinsured.
So, if a building would cost £300,000 to rebuild, but is insured for only £150,000 then the insurer consider the property to be 50% underinsured. This means if you made a claim of £150,000, the insurer would only pay £75,000, 50% of the sum insured.
The activation of averaging clauses is common and many people get caught out. We’ve worked with a number of clients who have received reduced cash settlements. This can be negotiated, however, this method of mitigation is limited in comparison to either having a one-off assessment or request a desktop review to see if there is potential a building is underinsured.
What’s Involved? //
When we conduct a BRCA, we undertake an inspection of your property or properties, and issue you a report with rebuild costs for all of the elements taken into consideration. For example, should a property burn down, we’re not just talking bricks and roof tiles, it’s important to take into consideration costs for clearance of the site, new plans to be drawn up, professional fees, construction and materials costs.
When talking about reinstatement, costs are given to repair, reconstruct or renew assets to an equal, but not better, condition (note: we’re afraid a BRCA won’t estimate the costs to add a swimming pool or a few outbuildings, but will focus on reinstating a like for like property).
Our assessments include visiting site to conduct an inspection and measurements, and issue you with a report you can understand and get the most from. We report on an extensive range of properties of all shapes, sizes and uses, so you can be assured we’ve seen it before and know how to assess the reinstatement value of your property accurately.
Recommendations and Further Advice //
The RICS recommends existing BRCAs are reviewed regularly, generally every 3 years or upon reinsuring, to reflect fluctuations in materials and construction costs, or undertaken at completion or immediately prior to completion of the sale. An existing assessment should also be looked at again and re-issued if changes are made to the building such as extensions or extensive refurbishment.
This will enable us to make sure all your materials and buildings are fully covered under your insurance policy. You don’t want to spend tens of thousands on an extension or refurbishment, only for the reinstatement value to reflect the original building, so keeping on top of and conducting BRCAs every few years are something to factor in to your budget and maintenance plans.
The Fourth Wall Standard
All our surveyors are members of the Royal Institute of Chartered Surveyors (RICS). With our diverse range of services and experience across the residential, commercial and heritage sectors, including: building design, project management and project monitoring, we’re uniquely placed to ensure your building is adequately assessed and insured to the correct amount.
