A Critical Reminder for Commercial Property Owners
If you’re a commercial property owner, chances are you’ve had to provide a Reinstatement Cost Assessment (RCA) at some point—typically for insurance purposes. But when was the last time you had it reviewed?
In an era of rising construction costs, labour shortages, and fluctuating material prices, an out-of-date RCA could be a ticking time bomb—leaving you underinsured and financially exposed.
What Is a Reinstatement Cost Assessment?
An RCA estimates the cost of rebuilding your property from scratch in the event of a total loss—think fire, flood, or major structural failure. It includes demolition, debris removal, professional fees, and compliance with current building regulations.
Unlike market value, RCA is all about rebuilding, not resale.
Why Keeping It Current Matters
Here’s why an up-to-date RCA is essential:
- Insurance Compliance: Insurers rely on your RCA to set your building sum insured. If it’s too low, you may only receive a partial payout.
- Cost Inflation: Construction costs have seen unprecedented increases in recent years. An RCA from just 2–3 years ago is likely obsolete.
- Avoiding the Average Clause: Many policies include this clause, which means if you’re underinsured, you’ll only receive a proportion of any claim. For example, if you’re 50% underinsured, you’ll only get 50% of the payout—regardless of the actual loss.
- Peace of Mind: Knowing you’re fully covered lets you focus on running your business—not worrying about rebuilding costs if the worst happens.
How Often Should You Review Your RCA?
Best practice recommends:
- Annually: A desktop review to account for inflation and minor changes.
- Every 3 Years: A full reassessment, especially if you’ve made significant alterations to the property or market conditions have shifted dramatically.
Don’t Wait for a Loss to Find Out
We’ve seen too many property owners caught out by underinsurance—realising only after a claim that their cover is inadequate. Updating your RCA is a small cost compared to the potential financial fallout of getting it wrong.
What to Do Next
If you can’t remember when your last RCA was done, or if it’s been over three years, it’s time to act. At FSL Projects, we offer professional RCAs tailored to commercial properties of all types—ensuring your insurance reflects reality.