Inspection Flashcards
(9 cards)
What is an Reinstatement Cost Assessment?
A Reinstatement Cost Assessment (RCA) is a valuation conducted for insurance purposes by an RICS qualified chartered surveyor.
What types of Reinstatement cost assessments are there?
Within this standard, consideration is given to the most common variants of assessment
likely to be requested:
a) day one reinstatement
b) reinstatement including inflation provision
c) reinstatement less wear and tear (‘indemnity’ basis)
d) obsolete buildings
e) site clearance, debris removal and ‘making safe’ costs only and
f) second-hand value of building materials.
What guidance is there for RCAs
Reinstatement Cost Assessment of Buildings RICS Professional Standard 2018/ Reissued 2024 (content remained the same)
Why would you add a TPI to an RCA?
To bring the raw calculation for rebuild to account for current inflation.
What is a day 1 reinstatement assessment?
Most buildings in the UK are insured on what is commonly known as the ‘day one reinstatement’ basis. Insurance cover arranged under such
policies allows for claims to be settled on a ‘new for old’ basis if repairs are actually carried out. In theory, it does not matter how old a building is or what its state of repair. If insurers have agreed indemnity by reinstatement cover, the damage to the building will be repaired to a condition substantially the same as, but not better than or more extensive than, its condition when new and the insured will not have to contribute to any betterment.
‘Day one reinstatement’ is derived from the fact that the sum insured is made up of two
elements:
* a ‘declared value’ and
* an ‘inflation provision’
What does declared value mean for an RCA?
This is the cost of rebuilding and associated other costs as detailed in section 5, at the level
of costs applying at the commencement of the insurance period without any provision for
inflation.
What basis should RCA’s be measured on?
IPMS 2/ GIFA (GROSS INTERNAL FLOOR AREA).
IPMS 2 is used for costings and is a method of measurement for a basis of calculating building costs and reinstatement costs.
Inclusions:
IPMS 2 – Office includes all areas, including internal walls, columns and enclosed walkways or
passages between separate buildings, available for direct or indirect use. Covered void areas such as atria are only included at their lowest floor level.’
Where can you find guidance on measuring buildings?
RICS property
measurement Professional Standard 2018.
What is an inflation provision under a DAY1 RCA?
This is a percentage uplift selected by the insured to cover inflation during the insurance year and during the subsequent period required for designing, planning, tendering and
actual reconstruction, however long that might take. The percentage selected can only be an
estimate based on anticipated building costs in the future and the worst-case scenario for
the length of time it could take to rebuild.
