The Complete Guide to Rebuild Cost Assessment
Many property owners still have a widely held belief that the market value of their property is the main driver for the sum insured but only rarely will you find that the actual market value is the same as the rebuild cost.
The rebuild cost has to include many different factors including hard standing areas, underground services and demolition. In some cases you can find the market value is higher than the rebuild cost but in the large majority of cases it will be the opposite, so it is recommended that you seek professional advice and have an independent valuation carried out on your property.
To give you piece of mind, Pavey Group can offer access to an online facility providing desktop valuations for most properties. The service is provided by Rebuild Cost Assessment Ltd and is regulated by the Royal Institute of Chartered Surveyors (RICS). Pavey Group can offer this service at a significant discount to clients.
The cost for an online assessment is £102 including VAT (for a residential property £72 including VAT). These costs are on the basis that the assessment can be done remotely via a desktop computer.
One of the benefits of online systems such as Google Earth, Google Maps, Street View, Zoopla etc. is that it provides surveyors with a wealth of easily accessed information to help measure the outline of the building and provide details such as the property dimensions.
With Street View, for example, you can see what the type of construction is: pitched roof, multi-pitch, etc. All these aspects, coupled with the location, provide the basis that allows the Chartered Surveyors at Rebuild Cost Assessment to establish the rebuild cost and, importantly, a rebuild period.
Calculating the rebuild period is crucial. 12 months indemnity periods are often not enough. If the valuations returned give 23 months for the rebuild, when you only have got a 12 month indemnity period, you are potentially underinsured.
How the online system calculates the value
This is where the skill comes in. Whilst it is an online system and the information is gathered from online sources, there is still a qualified surveyor sat at their computer conducting the assessments.
This is especially important for more complex cases. If, for example, your property is a Grade II listed building, the process of rebuilding is likely to involve Historic England. You are potentially going to experience planning issues as you may be required to reinstate external and internal original features. All of these considerations are likely to result in an increase to the rebuild period.
As part of the assessment, the team at Rebuild Cost Assessment will also factor in time for planning applications, planning permission being granted and architects drawings being approved, amongst other things. The surveyor is closely involved throughout the process to ensure that the right figure is calculated for a particular risk and that a rebuild period is realistic.
The benefits of having a survey
There are several benefits of having a survey like this done; firstly you have the security of knowing that you’re adequately insured and secondly most insurers with a RICS approved survey will waive the ‘application of average’ clause.
Is a desktop assessment always an option?
It not always possible to carry out a desktop assessment on a property. Below are some of the scenarios when it would be difficult or not possible to undertake an assessment in this way:
- An unusual location, for example, a property on the edge of a cliff in a location that complicates an assessment;
- The spread of properties could also be an issue, for example if there are lots of smaller outbuildings;
- Specialist properties, for example Grade I or II listed buildings, would not be submitted to a desktop assessment, because of the unusual nature and size of the properties;
- A specialist property such as a Racecourse or tourist attraction, because of their large scale huge site, with potentially lots of buildings;
- Sometimes complications also arise with, for example, a block of flats. A client could own six out of 20 flats then you might have to do a little bit more research into the lease and the freeholds to find out exactly what the client is responsible for (communal areas etc.)
Duration of the assessment
Straightforward assessments can take three to five working days, but more complex cases can take a little bit longer. If a desktop assessment is unsuitable and a visit is required (a quotation for this will be provided), the duration is often determined by the client; when they are available, whether there needs to be someone available to answer questions and take them around the site.
Validity of a Rebuild Cost Assessment
It is standard for the Rebuild Cost Assessment to be valid for three years. The majority of the reports that are generated recommend a revaluation in three years. If nothing has changed at the property, for example if there hasn’t been a change of usage or building developments, it becomes a simple exercise of re-inputting the figures and looking at it again.
With more specialist properties, the suggestion would be for a revaluation in two year intervals. For example for a thatched property, a lot of the value is going to be attributed to the roof. If, over two years, the reed crop is damaged by Japanese knotweed and the owner is forced to look further afield for suitable material, then the cost would be driven up.
Furthermore some buildings in the UK still contain asbestos; buildings post-1981 are generally asbestos free, but there are a lot buildings which still contain it in floor tiles, lagging on pipes, old electrical distribution boards etc. Again, the cost of actually demolishing the building and getting rid of the rubble goes up and can have an effect on the valuation.
Ultimately, it is your responsibility to make your insurance broker aware of any changes to your property’s circumstances so it’s always worth, if in doubt, to get in contact with them.
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