Insurers use this figure to determine the buildings insurance sum insured.
Underinsuring can lead to reduced claim payouts while overinsuring means paying unnecessarily high premiums for no additional benefit.
The RICS recommend every three years by a surveyor or immediately after a significant property alteration such as an extension.
In some cases, annual assessments may be more appropriate.
The market value is the estimated price a property would sell for on the open market under normal conditions.
The reinstatement value is the cost to completely rebuild a property if it were destroyed. These figures are very different and are entirely independent of each other. The market value should never be relied upon to determine the reinstatement cost assessment figure.
In short, no.
Due to major events such as Brexit and Covid in recent years, this has had a significant impact on the price of materials and labour which will not be factored into these incremental upticks to the reinstatement figure. This will likely result in underinsurance should the worst happen.
This is a common question from clients, however if you are paying for insurance it should be for the correct amount so you are fully covered should the worst happen.
Even if you have to pay more for the policy.
