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Insurance Averaging & Reinstatement Cost Assessments

Updated: Feb 17, 2020

How being underinsured can result in your insurance claim being massively reduced

According to the BCIS in 2012, approximately 80% of buildings in the UK were underinsured. This is quite concerning, given that if your property does suffer an insured peril, the insurer will average your claim down based on the current rebuild value against the sum insured.

For example:
  • A Building insured for £750,000 burns down.

  • The insurer values the current rebuild cost at £1,000,000.

  • £750,000 / £1,000,000 = 75%

  • The insurer will only pay out 75% of the claim leaving a shortfall in this case of £250,000!

Where do building owners go wrong?

While your insurance company may provide you with an indexed renewal figure annually, this does not accurately reflect the actual market costs of construction and peripheral matters above which may affect the rebuild value.

Some owners mistakenly insure the building for the capital value, which is in no way a reflection of the build costs and could result in massive overinsurance or underinsurance, depending on where in the country the property is.

The Reinstatement Cost Assessment

HAB Consult uses a variety of data from real time market costs and BCIS published rebuild rates to establish the actual rebuild cost, our knowledge of construction assists us in establishing any factors that may have been overlooked on a simple calculation.

We have extensive knowledge of construction methodology, specification and finish which best places us to understand the construction process of a building. Coupled with our extensive understanding of construction projects, we will account for all the associated professional fees required in the rebuilding process, statutory matters, complex access issues and specialist construction elements.


It is recommended that a formal measured survey is undertaken every 5 years or after any significant alterations are made, and a desktop appraisal is undertaken every 3 years.

This should be undertaken by a chartered building surveyor that understands the risks and implications of the insured perils and the construction process.

For more information get in touch or visit

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