RICS Guidance
When should block insurance valuations be updated?
For managing agents and freeholders, keeping reinstatement cost figures current is both a compliance requirement and a critical financial protection. Yet many UK blocks are operating with valuations that are years out of date.
The recommendation
Every three years, as a minimum.
The Royal Institution of Chartered Surveyors (RICS) recommends that a full professional reinstatement cost assessment is carried out at least once every three years. In between, annual index‑linked adjustments are acceptable as a bridging measure, but they are not a substitute for a professional assessment.
Many block managers assume that because their insurer applies annual indexation, they are covered. This is a dangerous misconception. Index linking adjusts the existing sum insured by a general construction cost index. It does not account for site‑specific factors, changes to the building, or localised cost inflation.
Why index linking isn't enough
A general index can't see your building.
General construction indices like the BCIS All‑in Tender Price Index track broad market movements. They cannot account for:
Changes to the building since the last assessment (extensions, refurbishments, cladding replacement).
Regional labour and material cost variations.
Specialist construction requirements (curtilage structures, listed features, complex M&E).
The compounding effect of index-linking an already inaccurate base figure.
If the original sum insured was wrong, and in our experience a significant proportion are, index linking simply perpetuates and compounds that error year on year.
Early triggers
Don't always wait for the three‑year mark.
Even within a three‑year cycle, certain events should prompt an immediate reassessment:
- boltMajor works or refurbishment to the block.
- boltChange of use of any part of the building.
- boltSignificant market shifts (as seen post-2020 with labour and material inflation).
- boltAcquisition of the freehold or change of managing agent.
- boltAny insurer query or challenge at renewal.
The consequences
What an outdated valuation actually costs.
If a block is underinsured at the point of a claim, most policies apply what is known as the average clause, meaning the insurer will only pay out in proportion to the degree of underinsurance. On a £5 million block insured for £3.5 million, a £500,000 claim could result in a settlement of just £350,000. The leaseholders bear the shortfall.
For managing agents, allowing a known outdated valuation to persist can also create personal liability exposure under ARMA guidance and general professional duty of care obligations.
Is your block overdue for reassessment?
We carry out RICS‑regulated reinstatement cost assessments, typically delivered within 48 hours.
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