Insurance Valuations

Reinstatement cost estimates

An estimate of the cost of replacing the asset with a new modern equivalent asset, including the use of current equivalent technology, materials and services, at the effective date. It assumes total loss.

In the case of partial destruction, no specific allowance is made for any additional requirements that any Council, Government or other Authority may require to upgrade, alter or amend the undamaged portion of the asset.

Where an asset has heritage elements, reinstatement does not include reproduction of original heritage features unless otherwise specified.

The estimate is based on construction cost rates derived from recognised building cost guides, supplemented where appropriate by actual project contracts and quoting. It may be used by insurers when setting insurance premiums and assessing Fire Service Levies.

Where a detailed elemental or schedule‑of‑quantities approach is required, the Insured may engage costing engineers and other specialists. This may also involve geotechnical investigation and the preparation of updated design documentation to current code requirements.

Inflationary Provision (reinstatement cost)

An allowance for cost inflation applied to above Reinstatement Cost over the full reinstatement period. This includes the 12‑month insurance period, the estimated lead time, and the reconstruction period. Lead time typically covers damage assessment, demolition, preparation and approval of preliminary proposals, development of working drawings and specifications, schedules of quantities, and the tender process. No allowance is made for delays arising from statutory processes such as the Resource Management Act.

Reinstatement Cost (for fire service levy only, after deduction of levy-exempt properties)

The figure reported here represents the Reinstatement Cost after deducting any levy‑exempt properties. Under the Fire and Emergency New Zealand (Levy) Regulations 2024, a levy is not payable in respect of the following property or classes of property:

a)           art or an item that is in a collection of a cultural heritage body (whether or not the art or item is currently present in or on that body’s premises):

b)          a reservoir, dam, drain, or channel:

c)           an offshore installation:

d)          a cable or pipeline on the sea floor:

e)           a breakwater, mole, or groyne:

f)           a bridge, road, street, or path, including while it is under construction:

g)           a mine:

h)          a tunnel, including while it is under construction:

i)            equipment that is used in a mining operation or tunnelling operation:

j)            an aircraft that flies international routes:

k)           a ship:

l)            a good for import or export:

m)         property that is insured under a contract of contract works insurance if that property is also insured under any other contract of fire insurance (meaning a levy is already payable in respect of that property).

Inflationary Provision (levy-specific)

An allowance for cost inflation applied to above Reinstatement Cost used for fire service levy purposes.

Indemnity Value

Indemnity Value represents the estimated loss the Insured would incur if the asset were destroyed. It may be assessed as Market‑related Value as defined under IVS 2025; however, unless specifically commissioned, it is typically calculated as Depreciated Replacement Cost (Reinstatement Cost less allowances for age and physical deterioration, excluding economic obsolescence). This figure is commonly required by insurers for assets nearing the end of their useful life.

Inflationary Provision (indemnity value)

The estimated amount where cost inflation exceeds depreciation over the 12‑month insurance period.

Demolition Estimate

It assumes 100% loss with no salvage value. It covers demolition and debris removal of the insured assets only, and excludes hazardous material removal, debris on adjoining premises, shoring of neighbouring structures, and removal of occupiers’ contents.