Insuring my house, what does Reinstatement Value mean?
As Storm Rachel reaches her zenith along Ireland’s West coast today, it might be a good time to review the reinstatement value for your home or business premises. So what is a reinstatement value and why is it important now?
Reinstatement valuations are primarily used for insurance purposes and are effectively an estimation of the likely cost of rebuilding a property in the event of it being damaged or destroyed. The reinstatement value is derived from the cost of construction at the particular time. When the economy was strong, building costs rose as a result of an increase in the costs of both building materials and labour and consequently the cost of reinstating or rebuilding a property rose too.
It was estimated at the height of the boom that the cost of constructing an average three-bedroom house of say 1100 sq ft was in the region of €175 per sq ft, meaning the reinstatement valuation was in the order of €192,000.
Values go down as well as up
Post 2008, in the wake of the economic slowdown, building costs in terms of materials and labour decreased, bringing down reinstatement values. However, today, with the recent increase in the cost of rebuilding, you may find your old reinstatement valuation leaves you short. Insurance companies will note the reinstatement value of the property in their policy documents and it is financially a good idea to keep the reinstatement value of your property under review.
Who carries out a reinstatement valuation?
Chartered Surveyors such as O’Neill & Co normally carry out these types of valuations making reference to guidance notes produced by the Society of Chartered Surveyors, which provide an indication of tender prices in relation to building costs.
If it has been a number of years since your last reinstatement valuation, you might be wise to consider having a fresh one done. Rachel will probably not be our only winter storm and waiting until you need to make a claim for storm damage could be costly if it turns out you reinstatement valuation is under estimated.
Call us on 045 856604 to discuss your situation.