Declared value (reinstatement cost) and contingencies

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    Declared value (reinstatement cost) and contingencies

    When calculating a reinstatement cost for buildings insurance, is it assumed that it must include a sum for contingencies? And if so what sort of percentage?

    The context is that I have been found to be underinsured and proportional remedy applied to the claim. The building reinstatement valuation upon which the proportional remedy has been based says
    Contingency allowance of 5% included. The Insurer is to verify if the policy cover is inclusive or exclusive of contingencies to cover to cover potential risks encountered during construction.

    The insurer is uncooperative and uncommunicative (to the extent that I have begun to prepare a negligence / breach of contract claim) so I cannot very much discuss it with them.

    My policy requires:
    You must always make sure that the sums insured shown in your schedule are adequate.
    i. Buildings should be insured for the full cost of rebuilding the buildings in the same form, style and condition as new plus an amount for architects’, surveyors’, consulting engineers and legal fees, debris removal costs and other costs to comply with government or local authority requirements.

    There is nothing in the definitions and the words "contingency" and "risk" do not appear anywhere in the policy wording. It is not clear to me whether that 5% contingency should be included in the calculation of the proportional remedy or not (the valuer clearly states that it is optional). I cannot find any definition of declared value online which refers to standard practice including a sum for contingencies.

    (Inflation during the period of cover is specifically covered).
    Assume I know nothing.

    I've just skimmed the RICS professional standards and guidance, "UK Reinstatement cost assessment of buildings" and there is no mention of contingency sums anywhere in it. It says that each report should make allowances for specific peculiarities of any site but does not mention making allowances for unforeseen circumstances and works.
    Assume I know nothing.


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