Functional Replacement Cost is the estimated cost as at date of valuation (including relevant fees) required to replace the existing asset with a new asset to perform similar function but under optimum current design and layout conditions with capacity being no greater than currently available.
This also means that the parish may want to look at what best suits the parishes needs, whether they require as large a building or they may look at providing more practical building which best caters for the requirements of the parish and community. The Parish would need to let the valuer know what the building size, style and facilities are, so that the functional reinstatement cost can be provided. A basic specification needs to be provided here.
For clarification insurance definitions are as follows:
- Reinstatement – Modern Equivalent
Reinstatement is interpreted as replacing with a modern equivalent. Under this definition the insurer will reinstate with a new structure of similar size and quality as the existing building. If the existing building has particular items that are not generally found in a standard modern building, like rimu skirting boards or a hardwood staircase, they will be substituted with modern materials. If you wish to have any such distinctive items included in a rebuild, these would need to be priced separately and added to the ‘sum insured’ as special features. This includes the likes of Historic stained glass windows and Organs or any pulpits which carry historical value. Specialist advice needs to be sought here.
- Replacement – Is the same form but using modern materials where necessary
Replacement means to rebuild a structure that is the same as the original. Prior to the Christchurch earthquakes, New Zealand was unusual in its adoption of ‘replacement insurance’. Most other jurisdictions have always been ‘sum insured’. The changes post-quake by our own insurance companies has simply brought us back in line with the rest of the world.
- Replication – Is the same
Replication means replacing your building with one that looks the same as the original. Most commonly used for historic buildings and heritage homes, replication is set up to replicate the original item or structure as closely as technically feasible and using the same or similar materials and practices. Facades may need to be replicated or older weatherboard profiles copies, for example. Because most or all of the building elements need to be handmade, ‘replication’ is many times more expensive than ‘reinstatement’.