Buildings insurance covers the cost of repairing or rebuilding your business premises if damaged or destroyed. Insurance should cover against the cost of rebuilding the property, not against its market value.

Building owners should ensure that their cover is maintained at the correct level and undertake regular building insurance surveys to ensure that adequate cover is provided should the worst happen. Building owners may be able to offset the cost of insurance premiums through service charge allocation to leaseholders.

Accertum offer expert assessment of building cost reinstatement valuations provided by experts:

Site visit and building assessment
Reinstatement cost calculation & reporting
Compliance with RICS Guidance Note: Reinstatement Cost Assessment of Buildings, 3rd edition effective from June 2018
Annual reinstatement cost update appraisal
Access to cost data for similar projects

Risk of Being Under-Insured

Unfortunately, it is common for commercial buildings to have buildings insurance policies which do not cover the reinstatement value. The risk of underinsurance may not be apparent when placing your insurance policy but this can be catastrophic for a business if a building is completely destroyed by fire or a similar event.

The reinstatement value of a property is the amount it would cost to demolish the building and re-construct the building. If your reinstatement cost is under valued, the level of cover may not be sufficient to rebuild your premises should the worst happen. In the event of s shortfall, the building owner will be required to make up the difference in the event of a loss.