Replacement Cost Valuation Explained

What is a replacement Cost Valuation?

A Replacement Cost Valuation, (RCV) is a report that sets out the cost to rebuild a particular building with the same materials in the event of a total loss due to an insurable cause such as fire. Replacement costs are construction costs that are current as at the time of the Valuation. A current RCV is an essential aid to you, your broker and your insurer in determining the correct insurance value for your building. You never know when your building could suffer a major or total loss. Are you fully covered in this eventuality? Only a professionally prepared Replacement Cost Valuation can provide the peace of mind that you are not over or under insured.

RCV’s are opinions as to the replacement value as set out above and usually based on a generic database from another recognized company that assembles square foot data on a regular basis and interprets this data using algorithms. Tudor goes two steps further. We utilize as many as three databases, depending on the type of building and the availability of relevant costing from each database. Also, Tudor applies its construction and valuation experience to provide an opinion that is realistic for each building that we value.

Why should your clients employ an independent Replacement Cost Valuator?

The probability of accurate insurance coverage on older buildings (5 years or older) is very low. From our experience, only 1 in 19 buildings are realistically insured. If your clients are over insured this will result in excess insurance premiums. If they are under insured they will be required to pay a substantial portion of any loss, frequently resulting in re-mortgaging of the property.

An independent valuator can provide you with a knowledgeable opinion of your building’s value that is unbiased and is prepared based on your particular building style and construction techniques.

Recent Posts