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Body Corporate Insurance Glossary

Reinstatement Value

Reinstatement value is the cost to rebuild a building to its current standard, including demolition, debris removal, professional fees, and compliance with current building codes. It is the basis on which most body corporate building insurance sums are calculated.

Reinstatement value is distinct from market value (which reflects land plus building) and indemnity value (which deducts depreciation). For insurance, only reinstatement value matters — you cannot rebuild a 30-year-old apartment block at market value because market value bundles in land.

A registered valuer's reinstatement valuation will typically include: structural rebuild, finishings to current standard, demolition and site clearance, professional fees (architect, engineer, project management), council compliance costs, and an inflation allowance for the period until rebuild completion.

Related terms

Sum Insured

The sum insured is the maximum amount an insurer will pay out for a covered claim. For body corporate building insurance in New Zealand, it is set to the estimated full replacement (reinstatement) cost of the building, including demolition, professional fees, and inflation provisions.

Indemnity Value

Indemnity value is the depreciated value of property — what it is worth today, accounting for age and wear. It contrasts with reinstatement value, which is the full cost to rebuild. Body corporate building cover is almost always written on a reinstatement basis, not indemnity.

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