RICS explained
What is a building reinstatement cost?
It is the single most important figure on your buildings insurance policy — and the one most often wrong. Here is what it means, how it is worked out and why it matters.
The definition
The cost to rebuild from scratch.
A building reinstatement cost is the total amount it would cost to rebuild a property completely if it were destroyed — for example by fire, flood or collapse. It covers demolition and debris removal, the full rebuild to current standards, professional and design fees, and an allowance for inflation over the time it takes to settle a claim and complete the work.
This figure — not the market value — is what your buildings insurance sum insured should be based on. It is usually established by a RICS‑regulated surveyor and reviewed regularly so it keeps pace with construction costs.
A common confusion
It is not the same as market value.
Market value and reinstatement cost answer two different questions:
Market value
What a buyer would pay for the property today — including the land, the location and demand. It rises and falls with the property market.
Reinstatement cost
What it would cost to physically rebuild the structure — land and location stripped out entirely. It tracks construction costs, not the housing market.
In some areas the reinstatement cost is higher than the market value; in others it is lower. Insuring at the market value is one of the most common causes of underinsurance.
How it’s worked out
From floor area to final figure.
A RICS‑regulated surveyor builds the figure up from measurable facts about the building:
- checkThe gross internal floor area, construction type, age and number of storeys.
- checkCurrent build-cost rates from live BCIS data for the property’s type and location.
- checkDemolition, debris removal and professional or design fees.
- checkOutbuildings, garages, walls, fences and other structures on the site.
- checkAn allowance for inflation over the rebuild period.
Why it matters
Get it wrong and your claim shrinks.
Most buildings policies apply a condition of average. If the sum insured is lower than the true reinstatement cost, the insurer can reduce every claim by the same proportion — even a small, partial one. A property insured for 80% of its rebuild cost may see a claim cut by a fifth.
The only reliable protection is an accurate building reinstatement cost, established professionally and reviewed regularly. RICS guidance is a full assessment at least every three years, with annual index‑linking in between.
Know your building’s reinstatement cost.
We carry out RICS‑regulated reinstatement cost assessments across the UK, delivered in 48 hours.