VALUATIONS FOR INSURANCE

‘The Estimated New Replacement Cost is the cost of replacing the improvements to the subject property as if new, at prices applicable at the valuation date. Inclusive of professional fees, construction costs and demolition costs but exclusive of any finance charges.’

By this definition, the aim is to determine the cost of reinstating a building – in the event of total destruction – to a building of identical design and quality standard but with contemporary building materials and workmanship at today’s costs.

The building rate is assessed in accordance with a number of factors such as building design, wall-to-ceiling ratios, quality of finishes, the underlying topographical and geological conditions etc. The resultant rate per square metre is multiplied by the total floor area and added to the cost for demolition works, rubble removal and professional services to arrive at the total estimated building replacement cost.

It is important to note that the land is not insurable and must therefore be excluded from this assessment.