Many properties are insured for their market value, but this can be very risky.
The reinstatement value and market value can, and generally do, vary significantly. The reinstatement value includes the demolition and rebuilding costs for a property, whereas the market value represents what the owner might get if they sold it.
Aston Lark always recommends that you use a registered Royal Institute of Chartered Surveyors (RICS) surveyor to provide you with a full reinstatement assessment.
A reinstatement cost assessment significantly reduces the risk of underinsurance and resultant financial penalty. If your property is incorrectly insured, you may be left seriously out of pocket in the event of a claim.
Where a building is underinsured, an insurer may apply ‘average’ in the event of a loss. This means that if the building is only insured for 60% of its correct reinstatement value, then the insurer will only pay out 60% of the claim – even if the total claim is less than the sum insured. In extreme cases of underinsurance, the insurer may deem this to be reckless and cancel the policy or refuse to pay any of the claim.
At the other end of the scale, overinsurance is the equivalent of throwing money away.
Residential rebuild evaluations
If you have a household insurance policy with us, you may be able to obtain a free-of-charge rebuild estimation for your property through the Building Cost Information Service (BCIS) Residential Rebuild Cost Calculator*.
*Please note that Aston Lark cannot be held responsible for the accuracy of the figure produced by the calculator, and we would always suggest you seek additional professional advice. Please also note that this service is not available for commercial properties, blocks of flats or high net worth properties where a full survey would be required to provide you with an accurate evaluation.