All you need to know about rebuild cost assessment

  • Getting the correct rebuild assessment is critical in ensuring you have the right level of insurance.
  • Buckingham Insurance can arrange a RICS approved assessment on your commercial property for just £102 including VAT.

As a business owner or manager, you will be well aware of the annual business insurance review and perhaps look forward to it with a degree of resigned dread. One area that ought to be looked at carefully is the cover that you have in place for commercial property, and in particular the stated value for rebuild costs.

What is the difference between property value and rebuild costs?

Commercial property insurance policy costs are calculated based on a range of factors – including rebuild cost. Rather unsurprisingly, this is a valuation placed on the property for it to be rebuild or repaired in the event of an insured incident – for example a fire or flood.

What many people don’t realise is that rebuild costs are not calculated based on a properties saleable value. Rather, it is calculated based on the actual costs of having to rebuild the place, and that can mean a very different figure to retail value. Yet many business premises insurance policies are mistakenly based on the wrong figure.

What are the consequences of an incorrect rebuild cost valuation?

Where a property is over valued for rebuild, its quite straightforward – you are probably paying more than you need to for your insurance, and an accurate, independent valuation would mean you may be able to get cheaper property insurance than you already have. But where the rebuild cost means that the property is under valued, the consequences can be very serious – potentially leading to no pay out in the event of an incident.

Example of an incorrect rebuild assessment

We recently came across a client looking for commercial property insurance. The property – a 1950’s distribution centre –  had previously been valued for this purpose at £1.7m. We instructed a RICS approved assessment at the cost to the client of £102 +VAT, which revealed that the true property value was actually in excess of £2.2m inc VAT.  Had there been a claim, the rue of average would have applied, and the payout reduced as a proportional percentage – which may well have represented a significant issue for the business.

Get an accurate rebuild cost assessment arranged with Buckingham Insurance

We can arrange a RIC’s approved rebuild cost assessment for just £102 for your commercial property. Simply give us a call today and we will get it arranged and also offer advice on the appropriate cover that you may need to get in place.