Like-for-like reinstatement, is it always the answer?
- Reinstating a building typically dictates the use of comparable materials and methods of construction
- However, with technology and building regulations constantly evolving, a like-for-like rebuild may not be the best solution
- We take a flexible and common sense approach to reinstatement, offering the best possible outcomes for your property claims
Building claims are settled on what is called a ‘reinstatement basis’. This means repairing or replacing a building to the same specifications as before it was damaged – essentially, a like-for-like replacement. If the property was four storeys high and constructed of bricks and mortar, then it would be rebuilt to those specifications.
In most situations this is perfectly suitable; but what if there was a better way of doing things at no extra cost? Should you always pursue a like-for-like reinstatement where there is an opportunity to reduce future risk, or where you may benefit from a different solution?
Tackling future risk
A major loss caused by a flood or fire for example, can be devastating, but reinstatement can present opportunities to make some sensible changes that can help manage future risk. With new methods and materials constantly emerging, some improvements can be made with little additional expense, or none at all.
For example, reinstalling electrical sockets higher up a wall is a very simple step, but could help minimise the risks associated with flooding. Replacing traditional plaster with Limelite – which has greater water resistance – could also reduce possible flood damage.
Fire hazards are particularly significant, especially when dealing with older buildings that may not have had the benefit of modern fire-engineering techniques. Knowledge and technology in protecting against fire is constantly developing, and considering potential changes to a building’s design could be beneficial.
The installation of a sprinkler system, for example, is estimated to reduce losses by 90%, compared to losses in unprotected buildings. Considering 99% of fires can be controlled with only two to four sprinkler heads, they can provide a very affordable way of managing future risk to a building. (Source: British Automatic Fire Sprinkler Association)
Becoming more sustainable
Sustainable construction and energy efficiency are particularly important issues for today’s regulators, and recent years have seen a variety of legislation being introduced to address these topics.
Under a provision of the Energy Act, for example, it will become illegal from April 2018 for landlords to rent out a property not achieving a minimum energy efficiency standard (currently an ‘E’ rating). The UK’s Building Regulations also lay down strict requirements for improving the thermal efficiency of buildings.
European regulations also influence how buildings are reinstated: the Energy Performance of Buildings Directive and the Energy Efficiency Directive, for example, are both directed at reducing the energy consumption of buildings, and the EU has set a target (which the UK has committed to) for all new buildings to be “nearly zero-energy” by 2020.
The regulatory picture can change further depending on where you are in the UK, with local authorities free to draw up their own requirements.
The City of London Corporation, for example, requires a sustainability statement to be produced for all major new builds and refurbishments, while even smaller planning authorities need to demonstrate how they address climate change and sustainability issues.
Paul Redington, Senior Claims Adjuster at Zurich, cites the example of a health club which suffered a major fire. The local authority asked them to install a solar-powered heating system at a cost of £1 million. On another occasion, an authority insisted on an expensive air filtration system for a block of flats, where no such system existed previously.
“It’s important for customers and brokers to understand the local requirements,” says Paul.
Meeting your needs
To meet the regulatory complexities of a reinstatement project, Zurich’s standard commercial policies cover the cost of complying with minimum UK and EU building regulations.
Zurich is very amenable about having that conversation about putting a building back in a more sustainable way
Paul Redington, Senior Claims Adjuster at Zurich
“In the event of a claim, Zurich is very amenable to having that conversation about putting a building back in a more sustainable or sensible way – whether that’s cost-neutral, or through taking advantage of one of our adaptation clauses,” says Paul.
“Zurich takes a very joined-up approach to dealing with a large property loss. We involve a number of different teams and external experts to work with brokers and customers to achieve the very best outcomes.”
In the event of a major loss, we will not only strive to repair any damage caused, but, where possible, put customers in the best possible position for the future.
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