Property Damage Reinstatement – Another Way, Another Place?

For most property owners, the decision to rebuild following a major buildings loss is quite straightforward.

For those who use their buildings for their business the best option is often a straightforward repair or re-build in identical form.

For property owners who lease their premises to tenants, their decisions on how or where to rebuild might be swayed by various lease obligations to repair or rebuild quickly and in the same format as before.

However, occasionally, property owners can take advantage of certain claim settlement conditions found in most buildings policies. Typically these conditions read as follows:

“The work of reinstatement (which may be carried out upon another site and in any manner suitable to the requirements of the Insured subject to the liability of the Company not being thereby increased) must be commenced and carried out with reasonable dispatch.”

The above condition permits the Insured to rebuild their property in a different way. This may enable the property owner to benefit commercially from perhaps increased rents or asset value by reconfiguring the property to an alternative size, formation or commercial usage.

Alternatively, they might choose to use their Insurer’s funds to reinstate property at a different location.