A hotel’s insurance schedule can become outdated after renovation, changes in use, new equipment or cost inflation. Reviewing the declared building value is not the same as checking market value or the purchase price. The owner needs to understand what the policy covers, how the insured figure was prepared and which specialist should update it. For the wider operating context, see hotel owners | hotel operations | the Feathers Hospitality approach.
This decision should reflect the property’s specific operating context. Learn about the Feathers Hospitality approach.
At a glance
- Read the policy basis, exclusions and declared values before renewal.
- Record physical and operational changes since the last assessment.
- Use a qualified reinstatement-cost professional for complex assets.
Separate market value from rebuilding cost
A property’s sale value does not tell an insurer what it may cost to clear, design and rebuild the hotel after a major loss. Reinstatement assessments may include demolition, professional fees, external works and other items depending on the policy basis. Ask the broker and insurer which value they require.
RICS describes reinstatement cost assessment as a specialist scope and warns against treating a generic area rate as a complete answer. Its standards are a professional reference; confirm which method and qualifications are appropriate under the local policy and Portuguese context.
Review changes since the last valuation
List extensions, room conversions, upgraded kitchens, lifts, pools, plant, accessibility work and changes to external areas. Keep invoices, plans and asset records, but do not assume project cost equals current replacement cost. A building may also have unique construction or heritage features.
Check whether business interruption, contents, fixed equipment and temporary accommodation are insured separately. The property schedule and the policy wording may define these categories differently; ask the broker to reconcile them.
Check policy assumptions and inflation provisions
Read the declared value, indexation, day-one uplift, excess, exclusions and period of indemnity with the broker. Confirm whether the figure is a reinstatement estimate or another basis. Inflation protection can work differently across contracts and does not remove the need to verify the starting value.
Ask how professional fees, demolition, debris removal, taxes and statutory requirements are treated. Do not assume every item is included because another hotel’s policy included it. Keep written answers with the renewal record.
Decide when an updated assessment is warranted
Set a review trigger for major works, acquisition, material building changes, an unusual construction type or a long gap since assessment. A competent surveyor or cost professional can advise whether a site visit, measured survey or a more limited update is suitable.
A desktop estimate may be less reliable for a complex hotel with plant, multiple structures or unusual materials. Record its limits and do not present it as a full site-based assessment when it is not.
Coordinate the owner, operator, broker and insurer
Confirm who is responsible for commissioning the assessment, providing records and notifying the insurer. The hotel operator may know recent changes while the owner holds the policy. Agree a deadline early enough for questions and corrections before renewal.
Give the assessor access and accurate information about building areas and installed assets. Ask for a report that states scope, assumptions, exclusions and valuation date. Share only the information needed and use approved channels for commercially sensitive documents.
Keep a renewal decision trail
Store the report, policy schedule, broker correspondence and approvals together. Note what changed from the previous figure and why the owner accepted the result. After a claim, renovation or substantial market disruption, revisit the assumptions rather than waiting automatically for the next cycle.
The RICS material is grounded in its professional context and must not be treated as Portuguese insurance law. The policy, insurer requirements, applicable rules and specialist advice control the actual decision. Owners should confirm coverage with their licensed broker and legal adviser.
Frequently asked questions
Can the hotel use its purchase price as the insured building value?
Not without checking the policy basis; purchase or market price may differ substantially from reinstatement cost.
How often should an assessment be repeated?
Follow the insurer and policy requirements, and trigger an earlier review after material changes or when a specialist recommends it.