What is a Reinstatement Cost Assessment (RCA)?

 

A Reinstatement Cost Assessment (RCA) is used to calculate the potential cost to rebuild a structure and provide a ‘day one reinstatement’ figure known as the declared value. According to RICS, an RCA should be carried out every 3-5 years. 

 

It’s essential for commercial property owners to arrange regular assessments of their building(s) to ensure that they are properly insured in the event of a fire or other devastating incident to allow for the cost of rebuilding the destroyed property or restoring the damaged section of the building to a condition which is substantially the same as, but no better than, the condition of the building, or section of the building, when new. Over-estimating a building’s value will result in excessive premiums being paid, while under-estimating the reinstatement cost will mean that insufficient funds are available to reinstate the property which can cause irrecoverable damage to any business.

 

In short, the RCA can be used to provide evidence to insurance or other relevant parties of the cost to 'reinstate' the building or a part of the building in the event of damage or total destruction of the property or specified area.