Do I Really Need a Reinstatement Cost Assessment?
Leanne Gresswell
The short answer? Yes. We've teamed up with Cardinus Risk Management to explain why...
The key purpose of a Reinstatement Cost Assessment (RCA), otherwise known as a Building Insurance Valuation, is to ensure that a property is adequately covered by the Buildings Insurance. This is achieved by establishing what it would cost to demolish and rebuild the property, as well as all of its peripheral features. A professionally conducted RCA will provide a complete assessment of a property’s rebuild costs, taking into consideration:
- The main structure (including foundations)
- Half of the cost of party walls/protecting adjoining structures
- The cost of demolition
- The cost of debris removal
- The cost of labour and materials
- The cost of professional fees
It will also take into consideration any unusual fixtures and fittings, or whether the building is listed. As well as the property's various peripheral features, which may include:
- Walls, fences and gates
- Garages, bin stores and outbuildings
- Car parking areas, drives & access roads (including private access roads)
- External lighting
- Sewage and water pumping plant
- Hard (and often soft) landscaping
- Swimming pools, tennis courts and other leisure facilities
Conducting regular insurance valuations means that the property can be insured on an 'agreed value', rather than an average. So that, should the worst happen, the property (and its leaseholders) are protected.
What are the implications of underinsurance?
Under-insurance can have a number of implications, here’s an example provided to us by Cardinus
Risk Management...
Consider a building with a current sum insured of £3,600,000. If we assume the rebuild value was actually £4,320,000 (in other words, it was undervalued by 20%) and a claim was made at a cost of £2,500,000 then, if insurers applied an averaging clause - saying the cover was only 83.33% of the true building value, the settlement made by insurers might be just £2,083,250 – leaving a shortfall of £416,750. That bill would then have to be met by the landlord or collectively by the leaseholders. This could have one or all of the following implications:
- Claims payment does not cover the full property repair/building cost
- Funds may not be available to complete the rebuild
- Increased borrowing may be required
- Negative impact on balance sheet
- Difficult negotiations with insurers
- Upset leaseholders and tenants
- Extended rebuild times
- Potential legal action (from lenders and leaseholders) for inadequate levels of cover
- Damage to reputation and brand
But, am I really likely to be underinsured?
You would be surprised at how many properties are deemed under-insured following a Reinstatement Cost Assessment, and often by a significant margin. In the past, we’ve seen properties under-insured by more than 20%. This could be due to a number of reasons, such as:
- The insurance being based on market value rather than the property’s declared value.
- The insurance being based on developers figures, which may not include costs such as debris removal or surveyor fees.
- Historical figures having been rounded up, without taking into consideration a rise in material and labor costs.
- A professional valuation hasn’t been carried out within the last three years or more.
It is recommended that a Reinstatement Cost Assessment is carried out every three years, at a minimum.
Ok, so how do I arrange a Reinstatement Cost Assessment?
If you think you need a Reinstatement Cost Assessment, please get in touch with your Property Manager. If we have one on file, we can provide you with a copy. Otherwise, we can arrange for one to be carried out on your behalf, via Cleaver Property Services’ risk management offering. We work predominantly with Cardinus Risk Management to provide this service to our clients.
The process of a Reinstatement Cost Assessment is as follows:
- Pre-visit Preparation - time spend researching the building to gain an initial understanding of its size and peripheral features.
- On-site Assessment - a qualified assessor will conduct a walk-around and measure up (according to the RICS code for measuring practice). A sketch plan will be drawn to record the footprint of the buildings, including the number of storeys present in each; this will be supported by a photo log. The assessor will then establish the gross external area of the buildings.
- Post-visit Report - the assessor will then compile a report, and carry out appropriate calculations to determine whether the property is over, under, or adequately insured. This would usually be measured against the building's current declared value.
We will always do our best to send you a reminder when your next RCA is due, and can also assist in arranging adequate Buildings Insurance cover, should you be declared under-insured; we are appointed representatives of Marsh Commercial, and regulated by the Financial Conduct Authority in respect of our insurance activities. If you have any further questions regarding Insurance Valuations and/or our Risk Management service, please don't hesitate to contact us.
From autumn 2025, under the Economic Crime and Corporate Transparency Act 2023, all directors and Persons with Significant Control (PSCs) must verify their identity with Companies House. While many firms are handling this quietly in the background, we believe our clients deserve full visibility into what’s happening and how we’re preparing on their behalf. So, What’s Changing? This isn’t just another form to complete. The law is designed to: Stop people from using companies for criminal or dishonest purposes Improve transparency in the UK’s corporate system Ensure every director is personally identifiable and accountable If you don’t verify your identity, you may: Be barred from acting as a director Prevent your company from filing legal documents Be subject to fines or disqualification How Are We Supporting Our Clients? We’ve rolled out a full, structured support plan to help directors meet the new requirements. Here’s what Cleaver are doing : 1. Notifying Directors Early - We’ve contacted all directors across the companies we manage using tailored letters and templates, clearly explaining what’s required and when. 2. Offering Step-by-Step Guidance - We’ve created easy-to-understand materials to help directors: Choose how to verify (online, Post Office, or via an ACSP) Understand the process Get support if they’re unsure where to start 3. Tracking Progress Internally - We maintain a compliance checklist for every company we manage. This allows us to: Track which directors have verified Send timely reminders to those who haven’t Avoid last-minute compliance issues 4. Helping Boards with Removal (If Needed) - If a director refuses to verify and the company’s Articles allow for it, we’ll assist with: Legal guidance Notices and paperwork Filing director removal forms with Companies House 5. Answering Questions Along the Way - We’ve trained our team to answer queries about the new rules and if needed, we’ll help connect you with a solicitor or accountant who can act as an Authorised Corporate Service Provider (ACSP). Why Does This Matter? This legislation is a major step forward in protecting companies and the people who run them. We believe in staying ahead of compliance and ensuring our clients feel confident, not confused. By taking this proactive approach, Cleaver Property Management is helping to: Protect directors from penalties Ensure companies stay compliant Promote trust and transparency in the leasehold management sector Do You Need Help? If you’re a director and aren’t sure what to do next, we’re here to help you understand your responsibilities and how to meet them. Email your Cleaver Property Management contact or reach us at info@cleaverpropertymanagement Cleaver Property Management – Supporting Directors. Safeguarding Companies.
A Huge Congratulations to Sally Bell on her latest academic achievement!
A Huge Congratulations to Zoë!
A Huge Congratulations to Ben Parry on his latest academic achievement!
She did it! Cheryl braved the shave and raised £1,100 for Macmillan!
A Huge Congratulations to Tim Linfield on his latest academic achievement!
A Huge Congratulations to Diana Bucataru on her latest academic achievement!
Celebrating Emma Keeley’s Success: Achieving the TPI Level 3 Certificate in Residential Property Management
January 2025 edition of the Berkshire Local publication
Everyone here at Cleaver Property Management Ltd is thrilled to continue supporting Transform Housing & Support this year, we’ve donated a variety of Christmas Goodie Bags for Adults, Teens and Children, brightening the festive season for those who rely on their incredible services. This Christmas, they have launched a Transform Tree, a virtual tree where every donation helps spread kindness and warmth. https://ow.ly/cQYi50UfC2y 1. Choose your star or light on the virtual tree. 2. Donate to purchase your chosen star or light. Transform supports over 1,800 people each year, primarily in Surrey, but also in Wokingham, West Sussex and the London Borough of Sutton - Their purpose is to enable homeless and vulnerable people to live independent and fulfilling lives Together, we can make this festive season a little brighter for those who need it most. Every gift counts! Let’s come together to create a season of giving, love and community spirit!
