The Impact of Rising Building Costs on Insurance

We cannot escape the talk in the media about rising building costs. Even buying a tin of paint for a DIY job at home has become staggeringly more expensive over the last few years.

Part of our brief at BCH is to ensure that rising costs are reflected in our building reinstatement cost assessments for insurance purposes (RCAs for short). It is important that the value stated by the policyholder at the start of the policy is accurate and up to date. If not, then at the time of claim, the impact could be severe, as the claim could be reduced in proportion to the amount the true value bears to the value declared in the policy (known as pro rata settlement or Average).

Why has inflation taken off now?

Thinking back before the pandemic, there was talk of the impacts of Brexit being felt in the construction industry. BCIS (Building Cost Information Service part of RICS) gave three scenarios, the best, worst and most likely impact on construction activity and cost inflation. The cost drivers were predicted to be, losses of labour and potential delays in obtaining materials from the EU Bloc. When Brexit eventually happened, predictions became reality as the construction industry lost a substantial number of its overseas workers and had restrictions on imports from the EU.

Then in early 2020, the pandemic struck. Inevitably, construction activity took a sharp decline but rose relatively quickly throughout the summer of 2021. Early restrictions were, of course, imposed, and many construction sites had to significantly change working practices to ensure worker safety.

By March 2021, monthly output exceeded pre-pandemic levels – compounding issues that had been building throughout 2020. When demand exceeds supply, prices for labour and materials go up and lead times are delayed. Unusually and unlike previous construction cycles, the drivers of increased costs, were acute not only in the UK, but worldwide. The impact was massive, from the price of timber and carpenters, to plaster and plasterers and so on.

2021 saw a few more acute factors adding to the pressure on inflation including fuel costs, a shortage of HGV drivers and the ongoing effects of the pandemic. Contractors in fixed priced contracts were left to ‘absorb’ increased costs. History shows that this will lead to contractual disputes and delays in completions. There is also evidence of larger companies stockpiling materials. Speculating in this way was a sound move, but the result was a reduction in supply and rationing/shortages of supply for the wider market, particularly smaller sized contractors.

Combining this with the reduction in manufacturing capacity both here in the UK and overseas and the ability to transport materials, a substantial rise in cost was the outcome, as demand outstripped supply.

This chart shows the cost of labour and materials, alongside the BCIS House Rebuilding Cost Index and General Building Cost Index from June 2020, onwards.

Happy New Year-2022!

So, 2022 arrived and we ‘welcomed’ a new style of lockdown. True, buildings carried on getting built, but severe supply issues for labour and all components, raw materials including fuel, remained with us. We have reached a pinch point. Key indicators are that tender prices are rising at a speed not seen for many years.

Mark Fowler, Director of MDA Consulting, one of BCH quantity surveying partners, summed the situation up recently:

“In terms of how building costs and tender prices increased during 2021, it was interesting to see that a lot of data / commentators (including ourselves) were – at the beginning of 2021 – forecasting increases for the year in the region of 1% to 2.5%.

In reality, those same commentators have reported actual increases of anywhere between 4% and 6.5% (and the BCIS have reported 6.7%), so there has clearly been a far greater impact on both building costs and tender prices than most people were envisaging.”

Cost increases and shortages of certain materials have been widely publicised, and there is plenty of evidence that certain timber and steel components too have risen in excess of 50-70% through 2021.

But we must remember, when putting together a rebuilding cost value for insurance purposes, that different building construction methods could mean that one type of property has been more severely affected by inflationary factors, than another. This is addressed by a detailed RCA or Benchmark but is commonly overlooked by generalised indexation. A bespoke assessment recognises the fact that few buildings are ‘average’ and thus, basing assessments that value on average building costs, could leave a policyholder significantly underinsured, or in some cases overinsured.


Looking Forward

If 2021 was a surprise to most, how can we confidently comment on what’s to come?

At the time of writing, the headline inflation rate was announced at 5.4% which is the highest for 30 years. Predicted to go to 6-7% before levelling off in the summer. BCIS, currently reporting a 40 year high on materials costs, are commenting that it is likely that the pressure on material prices and availability will continue throughout 2022 but, that the major driving impact this year is likely to be further labour shortages.

Mark Fowler, further stated:

“It is interesting to see that the BCIS are currently forecasting increases for 2022 of between 1.5% and 3.5% – however, combined with the well-documented issues relating to Brexit, Covid, increases in transport and logistics costs, and ongoing uncertainty about energy/fuel tariffs, it is difficult to forecast with certainty what this might mean for tender prices during 2022.”

What is clear, is demand is exceeding supply, across many areas. The result is price increases. In time, if prices go up too much, demand will reduce as people push back projects. BUT, with insurance claims you don’t have the ability to delay decisions on the project, the project be it repair or rebuild must proceed quickly, to help businesses and families return to normality and the market rate at the time of loss, however high, has to be paid.

The Impact on Insurance and the Insured

In one of our most recent articles, BCH Director Martyn Barrett talked about the ‘hard market’ in insurance and what it meant for all stakeholders in the insurance process. Premiums are rising and a tougher stance is being taken on underinsurance in claims settlements. There is never a good time to be underinsured, but the climate is tougher now than ever. A significant rise in inflationary pressure on claims costs will only lead to even to more scrutiny of the claim and as part of that process the validity of the base sum insured set at policy inception.

It may well be short-lived but a policyholder could be caught out should major loss occur in a period of cost inflation. The Sum Insured could be completely exhausted even with an inflationary uplift built into the policy provision. Standard inflationary uplifts may not be enough, particularly if there is a complex building with a long reinstatement period. In short, the base figure must be right from inception.

As the experts in insurance rebuilding costs and how they relate to policy cover, BCH are left wondering how property owners can afford not to protect themselves properly, looking at both declared values and inflation provisions within policies.

Nobody wants a claim and none of us can predict, if or when, that might occur. But if the unpredictable happens, the last thing you want to discover is underinsurance. At that time, it is too late to correct. If there was ever a time to undertake an RCA or Benchmark, it is now. Furthermore, even if you’ve undertaken one recently, at the annual policy review you should consider what might have happened to costs for your type of property since the last RCA with your insurance professional.

More than ever, the approach to insurance valuation needs to be dynamic and the answer may well be more regular reviews until a degree of normality returns, which at the time of writing is predicted by many commentators…but for now we can look at all these predictions and make a judgement. We haven’t quite resorted to using a crystal ball!

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What does a ‘hard’ insurance market mean to us?

The hard market in insurance is undoubtedly leading to higher premiums and a tougher stance on claims. This is not a good time to be underinsured, as policyholders may suffer a shortfall in pay-out on an otherwise valid claim at a time they can least afford it.

Martyn Barrett BSc MRICS ACII FCILA FUEDI-ELAE, Director, Barrett Corp & Harrington

The majority of well- known insurers in the UK are multi-national, composite businesses with hugely diverse operations. Most offer cover for property, motor, health, liability, engineering etc as well as owning their own property portfolios. Putting it very simply, they make their living by balancing their assets and liabilities in the process delivering profits for shareholders, whilst paying claims.

Insurers are having a tough time, like most businesses and individuals, as we emerge into a post pandemic world. The insurance market was already under pressure pre Covid 19. Many factors were aligning over a period, all of which were squeezing margins and forcing the large composites to become ‘harder’ rather than face losses.

Insurance is often considered a grudge purchase for householders and businesses alike. This can, in part, be because the cost tends to rise and these days you don’t even get a piece of paper in return! Premiums are often a significant budget aspect but, statistically it is unlikely that it will ever give a return as most people don’t ever have to make a claim. BUT, if a big claim does come along, insurance could be the best investment ever made by any of us.

In short, we can’t live without the ‘peace of mind’ that a good insurance policy brings.

As illustrated below, through 2019 and onwards, factors aligned to create an insurance market where capacity was reduced, insurers became more ‘risk averse’ or, choosy in what they offered cover on. Supply began to be outstripped by demand. Insurers found that the cost of their own reinsurance was increasing, and this combined with many other factors led to premiums increasing, cost cutting in insurance companies and other action to ensure that insurers remained profitable whilst still meeting their commitments to policyholders.

Venn Diagram showing the causes that has resulted in a hard insurance market.

Along with a rise in almost all premiums, we also began to see our property insurance premiums increase. Behind the scenes brokers, were working hard to get the best deals from a market in which capacity was shrinking, particularly where the construction was deemed ‘riskier’ or non- standard. Reduction in capacity and resultant increases in premium, have been felt throughout.

There is another aspect of the hardening market that is emerging in insurer’s attitude to claims.

Contrary to the many urban myths, Insurers do pay claims. They contract with us to pay in the event of certain events happening- no ifs no buts- they pay. However, the whole principle of insurance is the benefit of the policy will be paid assuming you have paid the appropriate premium to reflect the risk that the insurer thought they were insuring. Here is not the place to discuss fair presentation of risk and the Insurance Act, but suffice to say that in most policies there is a direct correlation between the value declared at the time we take out the policy (and at subsequent renewals) and the premium paid. Should it be found at the time of claim that the rebuilding cost stated in the policy is inadequate then most policies have a contractual clause which allows the claim to be reduced in the same proportion that the true rebuild cost bears to the value stated in the policy. It’s called Average or proportionate settlement.

Insurers have always had the option to utilise these clauses, but historically, being keen to pay claims to maintain a good profile in a softer market, they have not enacted them. In the experience of BCH Director, Martyn Barrett, who began his Insurance career in loss adjusting, insurers seemed to accept a degree of what they called ‘claims leakage’. Underinsurance has always been out there, our own statistics at BCH after 15 years of trading still show staggeringly high levels

Underinsured properties

It may have taken the arrival of the hard market for insurers to start looking at the whole underinsurance issue more closely. BCH is now being called in regularly after a loss to check whether the insurance value was correct. This can only mean that the insurer is looking to use this to adjust the amount of claim, by applying Average or a proportionate settlement. That is very tough as the reduction in claim value will massively dwarf the amount of premium saved by not insuring for the correct value at the time the policy was taken out.

However, many insurers and brokers are also now part of a drive to educate policyholders on the importance of getting insurance values correct from the start so that problems do not occur at the time of claim. BCH is part of many of those initiatives and offers traditional RICS Compliant site-based reinstatement cost assessments (RCAs) and our market-leading, desk-based e-valuation service, Benchmark, which is increasingly being accepted by the major insurers and brokers as suitable for setting insurance values.

The hard market in insurance is undoubtedly leading to higher premiums and a tougher stance on claims. the growing volatility of construction costs throughout 2021 is likely to impact RCAs for some time, a topic worthy of its own article. This is not a good time to be underinsured, as policyholders may suffer a shortfall in pay-out on an otherwise valid claim at a time they can least afford it.

Remember that the insurance premium we all begrudgingly pay every year could end up the best investment we ever made.

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The valuation of listed and historic buildings for insurance purposes

A modern brick house might cost of the order of £1,500/m² £2,200/m² to rebuild. We frequently visit Listed properties which cost at least three times this amount and if the property is complex in construction with fine internal features, then the cost might be in excess of £15,000/m² to reinstate.

BCH experience is that listed buildings cost significantly more to rebuild following an insured loss than unlisted buildings.

Through our experience of providing valuations of listed and historic buildings for insurance all over the United Kingdom, we know that Listed buildings cost significantly more to rebuild following an insured loss than unlisted buildings.

Naturally the question on everyone’s lips is …”how much more? What percentage should I add to the sum insured?” We would love to give you a simple answer; but unfortunately it all depends.

The first factor to understand the valuation of listed and historic buildings is, where does the starting figure come from? If you have taken building rates from the internet (such as BCIS) that are intended for a 250m² modern home of a brick-block construction and our subject house is a stone cottage, in a conservation area, approached via a narrow bridge across a stream, the price per metre could be 100% to 200% more, i.e. £2,200/m² for the modern home and £6,000/m² for the stone house.

Where a listed building is in commercial use, there is even less published data available. At BCH we see a broad spectrum of listed structures from monumental office buildings taking pride of place in our town and city centres, to converted prisons and military barracks now in use as hotels or apartments. The published rates for new build office buildings range between £1,500 and £3,000/m² whereas an assessment for a classically inspired 18th century stone building – with many retained internal period features – in use by a local authority as offices could be assessed at £15,000/m2.

4 key factors which affect the valuation of listed and historic buildings for insurance

1. Professional Fees


For a Listed building one may need or want to employ a team of professionals (architects, surveyors, mechanical and electrical engineers, planning consultants etc.) who have specific experience, qualifications and/or a proven track record of working on such buildings.

Although fees are not fixed, you are likely to find that professionals with such specialisms charge more for their services than the average because of their expertise and because more time is involved to get the job done. You may also find that the correct person is not locally based and that additional travel and accommodation expenses will be charged. Very sought after teams may be busy at the time of a loss and having to wait for them may also increase costs.

Professional fees on a standard building might come in at around 13.5% including VAT of the rebuild cost. For a Listed building, let’s say an extra 5- 8% should be added. In very unique situations, 30% could be expected and some insurers set aside 25% as standard.

2. Time delays – of various types!

Work on Listed buildings tends to take longer than on a conventional building. For example, partition walls in modern buildings are often formed with plasterboard sheets nailed to timber studwork, whereas in Listed buildings timber laths and lime plaster might be used which takes much longer to construct and will involve more expensive specialist trades.

And this leads us onto the next point…

It is not uncommon for a Listed building to sit for at least a year following a major loss before reinstatement work can commence. Time delays cost money as there are still various professionals working in the background and prices tend to increase with inflation.

Time delays can also be caused by the site becoming of archaeological interest whereby the authorities insist on carrying out research etc. The cost of this is borne by the insurer.

For expected delays and increased working time on site, one could reasonably expect the overall value to increase by 5-12% depending on the specific property and grading.

3. Conservation Approval

All work to a seriously damaged Listed building will need approval from the Local Authority who may also call in Historic England. The home owner is therefore at the mercy of these bodies, who are keen to see that no traditional forms of construction are lost, when the damaged building is rebuilt.

Although some modern materials may be accepted, the cost of rebuilding will increase greatly if they insist on retaining the original form of construction. And there is no way of knowing in advance what the authorities will specify. It is not unknown, for example, for a stone quarry to have to be re-opened to provide similar stone to that which was originally quarried and used many years ago.

At BCH we will take into account the specific materials used on a site. If constructed from ashlar stone this could increase the cost of the building by over 50% compared to rebuilding in good quality brickwork.

An acceptable contingency on a modern home would be 5%. On a Listed building we would add perhaps 5-10%. If stone is from a specific quarry as detailed above, an additional contingency would need to be added.

4. Complexity

Many stately homes as well as small cottages have high sums added for garden walls and driveways, both of which should be included in the valuation upon which the premium will be calculated.

It is often said by clients that they will never lose the entire brick walls that surround their property and, in such circumstances, some insurers will pay for damage up to a certain limit (known as first loss.)

There are coach houses and other outbuildings which can add considerably to the sum insured as all of these buildings will be within the curtilage of the main house and therefore come within the Listing, even though they may not be separately described.

In London, there are difficult issues to contend with if the building fronts onto the pavement as materials delivered to site will need to be moved immediately inside the building. There are also problems and of course additional costs of working on building with restricted access and working space for reconstruction purposes.

To sum up the valuation of listed and historic buildings for insurance:

It is not simply the Listed status which increases the sum insured. It is the type of materials and labour required to reinstate an historic building, the additional fees that will be incurred, specific location factors and timing; all of which increase the valuation for insurance purposes.

You can find out more about our Reinstatement Cost Assessments for residential properties here or for commercial property click here.

This paper was originally written and researched in 2014 by:

Lorna Harrington BA(Hons), MA, PGDipConsHistEnv (RICS)

Nicholas Tufton FRICS

Updated in 2018 & 2021

Property insurance valuations and the underinsurance issue

In the majority of commercial or non-standard property insurance policies, the declared value (building sum insured or rebuild value) is critical to set the correct level of insurance cover.

An incorrect declared value could result in over-insurance – over payment of premium by the insured or worse still, underinsurance – resulting in a major financial loss to the insured in the event of a valid claim.

Underinsurance will only become apparent at the time when the policy is required to react, having a detrimental effect on the property owner and insurer partners.

How much of an issue is underinsurance?

According to our data, which includes over 55,000 property assessments, 80% of properties (non-standard, commercial or flats) are underinsured by up to 55%, on average.

To put this into context, if a property had £200,000 worth of damage on a building which is insured for £825,000, but should in fact be insured for £1,500,000, the insurers may only be liable for 55% of the £200,000 damage.

Therefore, the property owner would only be entitled to £110,000. This is despite the fact, that they are well within the £825,000 sum insured.

Underinsured properties

How could underinsurance affect a property owner?

Not having the right insurance coverage could be devastating for property owners to recover from financially.

If the property is used for commercial activities or for residential lettings, the financial impact could affect livelihoods too – putting business owners into bankruptcy.

Setting the rebuild value

Responsibility falls with the property owner or freeholding entity to ensure that the rebuild value of the property on the insurance policy is correct.

For non-standard, commercial buildings or blocks of flats, this is not a straightforward task – requiring specialist surveying knowledge and expertise.

Yet often, the rebuild value is estimated, or average price data such as the BCIS calculator, is used. It’s difficult to define what ‘average’ is when there are so many variables from one property to another and even more so with older properties, small holdings, blocks of flats and commercial buildings – ‘average’ is not reliable enough.

What happens when there’s a claim?

When a claim is made, a Loss Adjuster will assess whether the property was accurately insured.

If it is underinsured, depending on the policy wording, there may be a ‘Condition of Average Clause’ whereby the amount of claim is reduced proportionally to the value of underinsurance.

It is also possible that the insurer may be entitled to avoid i.e. not pay the claim, if it materialises that the risk was unfairly presented.

How to prevent underinsurance

The simplest way to prevent underinsurance is to instruct a RICS compliant Reinstatement Cost Assessment (RCA) from a reputable company.

An RCA is a site-based buildings assessment carried out by an experienced Buildings Insurance Surveyor.

The RCA can be tailored to a specific insurance policy and takes into consideration every aspect of a property from the boundaries and driveway to the fixtures and fittings.


Benefits of a Reinstatement Cost Assessment

When should a Reinstatement Cost Assessment be carried out?

If any of the below criteria are met, we would recommend an RCA is carried out:

  1. Building is listed
  2. Building(s) are made of stone
  3. Property is difficult to reach
  4. Building is eco-friendly
  5. Property was constructed before WWII
  6. Building has been recently altered
  7. Use of the building(s) has changed
  8. It’s more than 10 years since the building had a professional building insurance valuation
  9. Extensive external features such as outbuildings
  10. Updated with expensive fixtures and fittings

How to instruct an RCA

BCH are the chosen provider of RCAs to policyholders of major insurers and brokerages.

You can call us on 01455 293510, email or contact us here to arrange an RCA for a property.

If you are a broker, insurer or managing agent, you may benefit from our Portal which through a log-in, enables you to request, manage and track the status of multiple RCAs for your customers – ask us for more information!

Beware the valuations of commercial buildings based on average prices

Why BCH assessments differ from a so called average prices.

We are often asked why our assessments may differ from a so-called ‘average prices’ found on search engines. At BCH we carry out fully compliant Reinstatement Cost Assessments.

We are often asked why our valuations for commercial buildings or RCAs may differ from so-called ‘average prices’ found on search engines, Building Cost Information Service (BCIS) or The Association of British Insurers (ABI) guides.

Valuations for commercial buildings

Commercial buildings can range from a converted farm building in use as a nursery to a multi-story office block.

Some of the more unusual we have been asked to assess include a historic mortuary and crisp factory (not that the two are related!) but more commonly we see light industrial units, shops, academic establishments, offices, and hotels.

At BCH we carry out fully compliant Reinstatement Cost Assessments in line with RICS guidelines*. This may mean making reference to BCIS data, but in the main, never relying on it.

Understanding the breadth of the dataset and delving into the analyses that sit behind it, is essential to using it in a meaningful way.

*RICS professional standards and guidance, UK, Reinstatement cost assessment of buildings, 3rd edition, February 2018

BCIS Average Price Data

Below are excerpts from the BCIS Average Price data as at June 2019 based on a UK mean location.

Table showing average rebuild costs.

In this paper we will consider 5 key factors to explain why valuations of commercial buildings shouldn’t be based on average prices

1. Sample Size

The first thing to note is the sample size. This means the number of buildings that the data is based upon. Using BCIS data (see table above) you will note that the sample numbers differ greatly. Although useful in building up a picture, as a result of the limited sample of data these average prices may not be at all representative of the building subject to the insurance assessment.


Commercial building on River Bank
BCIS Average Prices are calculated from a dataset of buildings since 1961.

2. When was the subject building constructed?

Since BCIS Average Prices are calculated from a dataset of buildings since 1961, they may be inappropriate for a property built before that date; or indeed more modern buildings if the samples do not include more recent projects. Materials used in the 19th century are often more expensive than the ‘go-to’ materials from today. Wood was used for windows as opposed to UPVC or powder-coated aluminium. If the subject property is in a Conservation Area or sensitive location and ‘like for like’ replacement would be appropriate, the use of traditional materials could result in a higher cost per m2 than the average price data allows.


Commercial warehouse buildings
Average prices do not make reference or differentiation between different buildings on a site which would have different functions.

3. Does the property include a number of different buildings?

Misuse of average prices does not allow you to make reference or differentiation between different buildings on a site which would have different functions. To take educational establishments as an example, did the school have specific sports facilities e.g. swimming pool, climbing wall and AstroTurf pitches? Were their specialist classrooms incorporating fixtures to teach food technology or soundproofed areas for music practice? Was there a small theatre or concert hall, a chapel? All of these features are found at educational establishments and would require a different approach in each case.


Commercial office buildings
A key difference in the end value will be dependent on the type of materials used.

4. Specification does make a difference to insurance valuations for commercial buildings

For offices, a key difference in the end value will be dependent on the type of materials used and services present. For example, air conditioning and lifts would add to the cost. A variance in façade material from simple brick, to glass curtain walling and the use of a concrete or steel frame, would also increase the rate applied.


Warehouse Interior
Huge variances can exist behind similar external appearances.

What is through the keyhole?

When looking at industrial units, huge variances can exist behind similar external appearances. The presence of mezzanine levels holding offices with appropriate heating and lighting will change an overall value significantly when you compare to a building that is largely used as a storage facility and not sub-divided in any way. The rates for warehousing in the table show that no indication is made to specific construction materials. These specifics would not be catered for if one was to rely on an assessment-driven by average prices.


To conclude, relying on average price data for commercial property may not always give a robust result upon which to base insurance coverage and doing so could result in a shortfall in payout at the time of a claim.
At BCH we assess each building on its individual characteristics taking into consideration its construction materials, size and specific site and location factors giving our clients confidence and peace of mind.

Is property you are involved with insuring fully covered?

If you are involved in the insurance of commercial property and would like to ensure accurate re-build values are given for building insurance cover, please feel free to call us today on 01455 293510 or contact via email, the BCH office team will be happy to answer your query.

You can also find out more about our Reinstatement Cost Assessments for commercial property here.

Download a PDF version of this BCH White Paper.

Valuation of flats based on ‘average prices’ – what you need to know

Reinstatement cost assessments for flats, average value vs. actual value.

It is rare that two blocks of flats look the same externally and almost impossible for the internal lay out and finishes to be the same. So why would they be valued identically using average rates?

We are often asked why our Reinstatement Cost Assessments (method to provide a valuation of flats) may differ from an ‘average’ price found on search engines, Building Cost Information Service (BCIS) or The Association of British Insurers (ABI) guides.

It is rare that two blocks of flats look the same externally and almost impossible for the internal lay out and finishes to be the same. So why would they be valued identically using average rates?

Here are 4 common factors that affect the valuation of flats:

Structural masonry vs steel impact value of flats
Structural masonry vs steel can have a huge impact on cost.

1.Building Construction

Everyone can appreciate that there is a difference in rebuild cost between a modern and a period built property, however the building pathology itself is often overlooked. Each block of flats is unique and, in order to reach an accurate, RICS compliant, Reinstatement Cost Assessment (RCA), needs to be valued on an element-by-element basis.

The use of structural masonry versus steel frame on modern buildings for example can have a huge impact on cost. In the case of the external walls, examples of the range of finish can be seen from modular cladding with a rendered finish, to heavily glazed or with marble cladding.

These materials range significantly in value, ease of procurement and installation time – therefore impacting on the RCA; these details would be neglected in an insurance valuation based on average rates.

Surface finishes affect the insurance value of property
Surface finishes will affect the insurance value.

2.Level of fit out and specification

Floor finishes, wall finishes, quality of fitted storage and indeed specification of kitchens and bathrooms can vary hugely from development to development.

The value of kitchens in particular can differ significantly, with integrated white goods and appliances being included within a buildings valuation and non-integrated white goods considered a contents item and therefore should be excluded. It’s imperative the quality of these kitchens and their inclusions are accurately valued.

For example, kitchens have a large value range with a small kitchen with chipboard units and a laminate work surface having a far lower value than a bespoke hardwood kitchen with granite or high specification resin composite work surfaces, irrespective of whether their size is comparable.

All of these items would be reinstated in the event of a total loss and therefore have to be included in the RCA in order for the property to be accurately insured.

The value of a flats will be affected by any historic and non-standard finishes
Historic and non-standard finishes have to be allowed for.

3.Professional Fees

Using listed properties as an example, a variety of professionals would be required to ensure its reinstatement is approved by the planning authorities. Other elements such as conservation areas can also increase the fees required compared to a modern, modular new build without these influences.

Non-standard finishes requiring specialist trades can have equal impact to the RCA and the potential requirement of archaeologists, botanists and ecologists for factors not present during initial construction all have to be allowed for.

External items should be included for an insurance valuation for blocks of flats
All external items should be accounted for.


‘Externals’ include all items which are necessary and part of the development but fall outside the external walls of the main building. Examples include: mains utility connections and drainage, parking and bin stores. We have also come across tennis courts, bridges and historic cranes.

It’s imperative all such items are accurately accounted for within the RCA valuation with the rate of tarmac site roads being far lower than block paving. Items of larger impact can include structures such as garages and general stores, electricity substation housing and boundary markers.

Boundary walls and walls within the curtilage are also to be included, with a stone wall costing more than brick and retaining walls, be they sheet metal piled, concrete, brick or boulder, all influencing the final valuation.

Factors such as site access and waste management will all affect the valuation of flats
Factors such as site access and waste management will all affect the valuation

5.Site Factors

The RCA needs to be tailored to each specific site. Access, working area for site welfare facilities, waste management and general storage all influence the rebuild cost.

On sites with restricted access relevant permissions must be obtained from surrounding landowners. These can come with financial implications but can also delay the programme of reinstatement, incurring further costs.

Valuation of Flats – Conclusion

To conclude, a number of factors beyond the basic building fabric must be taken into account to reach the correct reinstatement cost for insurance purposes. An assessment based on element cost approach valuation is as unique as the property being assessed.

An assessment based on average prices often doesn’t offer the detail required to get it right!

If you are involved in the insurance of flats and would like to ensure accurate re-build values are given for building insurance cover, please feel free to call us today on 01455 293510 or contact via email, the BCH office team will be happy to answer your query.

You can also find out more about our Reinstatement Cost Assessments for flats here.