The short answer
The Day One reinstatement value is the estimated rebuild cost at the start of the policy period. Many insurers then apply an inflation provision on top of the Day One figure to allow for cost increases and the time taken to rebuild after a claim. We set out the Day One figure clearly and explain the basis for any inflation allowance so the declared value can be set correctly.
Keep the assessment basis, policyholder declaration and insurer-applied provisions distinct so each figure can be checked on its own terms.
Where further evidence may be needed
Can under-insurance affect a claim?
Yes. If the sum insured is materially below the true reinstatement cost, insurers can apply an "average" clause and reduce the claim payment proportionately, even for a partial loss. For a block this can leave leaseholders significantly exposed. A current, evidenced RCA is the most effective protection against under-insurance and average.
Turning the answer into a next step
Does the report include VAT and professional fees?
Yes, where relevant. The assessment includes professional fees, statutory charges, demolition and site clearance, and VAT on the elements where it applies, alongside the rebuild cost. The assumptions and the VAT position are clearly stated in the report so the figure can be understood and relied on at renewal.
What to do next
Establish an evidenced rebuild-cost basis.
Identify the Day One rebuild cost at the policy start.
Use that evidence to support the declared value.
Keep insurer-applied inflation provision separate from the Day One figure.
Related services
Sources and standards
Related questions
What is a declared value?
The declared value is the policyholder's assessment of the full reinstatement cost at the start of the policy period, on which the sum insured is based. It is not always the same as the sum insured, which may include an inflation uplift. An RCA gives an evidenced basis for the declared value so it can be defended at renewal and in the event of a claim.
What is a reinstatement cost assessment?
A reinstatement cost assessment (RCA) is a professional estimate of the cost of rebuilding a property after a total loss, for insurance purposes. It covers demolition and site clearance, rebuilding to current building regulations, professional fees, statutory charges and VAT where applicable, plus an allowance for inflation. It is the figure your buildings insurance sum insured should be based on, and it is different from market value or any mortgage figure.
Is reinstatement cost the same as market value?
No. Market value is what a property might sell for, driven by location and the property market. Reinstatement cost is the estimated cost of physically rebuilding the property after total loss, including demolition, clearance, professional fees, statutory costs and VAT where applicable. The two can be very different, particularly in London, and insuring on a market-value basis is the most common cause of under-insurance.
Related guidance
Savas Bulduk
BSc (Hons) MRICS, Director & Chartered Building Surveyor.
Writes on Building surveying, Fire safety and facade, External wall systems, Technical due diligence, Contract administration. See the full team profile.
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