Building Insurance – Portfolio Reinstatement Cost Assessment

Tim Greenwood and Associates are advising our Client in undertaking a reinstatement cost assessment of their property portfolio. Our Client is concerned that their property portfolio is incorrectly and inadequately insured.

The Buildings in our Client have been in their ownership for a number years, some for decades.  This portfolio has increased in size in subsequent years. Acquisitions to the portfolio were added to the insurance policy and their reinstatement values have not been re-assessed since.  The properties in the portfolio are located in the south east and into the west country. The buildings predominantly include small retail units with residential accommodation above.  The properties are of similar types although their individual sums insured vary significantly.  These variations in the reinstatement costs are inconsistent. Our Client is therefore concerned that the buildings reinstatement costs are inaccurate. If true, his may impact on any insurance payout in the event a claim is made.

The RICS (Royal Institution of Chartered Surveyors) recommend that reinstatement cost assessments are subject to a reassessment every 3 years.  This reinstatement cost assessment should include a site inspection obtaining measurements and construction details. Annual desktop reviews should be completed in the interim years and if there are no changes to the building a re-inspection in not required. This can only be done in the event there are no material changes to the building since the full reassessment. At this point the sums insured typically have an index linked uplift applied.

It is not clear when the property portfolio was subject to a complete reassessment.  This, and the fact there are significant and inconsistent variations, to the sums insured across the portfolio raised concerns. Our Client provided instructions to review reinstatement costs across their portfolio prior to the insurance renewal date.

Covid 19 and the current restrictions will impact this instruction and how we undertake it. This will prevent us from having full access to the buildings for our inspections.  We are working with our Client to agree on the delivery of this instruction whilst adhering to current government restrictions and social distancing.