An Insurance Rebuilding Valuation is normally carried out for insurance purposes. The valuation is used to determine the cost of reinstating a property following a total insurance loss, usually as a result of fire. Typically Insurance Rebuilding Valuations are undertaken by Building Surveyors or related professionals
The valuation demands considerable skill on the part of the Surveyor particularly when considering complex commercial or specialist buildings.
It is extremely important that the valuation is accurate, an undervaluation might leave the Insured exposed in the event of a claim, whilst an overvaluation will result in excessive premiums being charged.
When undertaking the Valuation the Building Surveyor has to take account of many factors, the most important of which can be summarised as follows
Basic rebuilding cost
The basic rebuilding cost will vary depending on the type of building under consideration. For instance, whilst a simple industrial building might have a basic rebuilding cost of £400/m2, a very complex, heavily serviced building with a very high standard of fixtures and fittings might have a basic rebuilding cost of £5000/m2 or more
Demolition
An allowance for demolition, based on the basic rebuilding cost is added into the valuation and which might vary from around 10%for a simple building to 20% for a complex building. The presence of Asbestos or other harmful materials will add further to the likely cost of demolition.
Above average proportions
Greater than average floor to ceiling heights or unusually substantial elements will have a considerable impact on the Insurance Rebuilding Valuation
Access
Of all the factors affecting rebuilding cost, access difficulties will probably have the greatest impact. Difficult and constricted city centre sites, devoid of space for materials and debris removal might easily cost twice as much to rebuild as an identical building in a readily accessible edge of town location.
Planning Considerations
The impact of the requirements of the local Planning Authority cannot be underestimated.
If a particular property is listed, then depending on it’s complexity, an allowance will need to be added into the Insurance Rebuilding Valuation. Similarly for properties in a conservation area it would be reasonable to assume that a higher standard of design and finish would be appropriate in the replacement building and an appropriate allowance will need to be made.
Party walls
If the reinstatement work involves party walls or otherwise has a direct effect on neighbouring buildings then an allowance needs to be added, in along with a reasonable estimate for Party Wall fees
Locality
Tender costs vary from region to region across the country and the Building Cost Information Service provides regional weighting allowances for use in building and rebuilding valuations of all types
Statutory and Contractual Fees
Finally an allowance has to be made for statutory fees likely to arise before, during and after the work and which will might include Planning Fees, Building Regulation Approval Fees, Statutory Undertaker’s Fees and the cost of obtaining Landlord’s Consent.
