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Reconstruction value in multi-risk insurance 2025

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Reconstruction 2025

When taking out multi-risk insurance for a property, the most important thing is to define the amount to be insured, which should be the reconstruction value. There are several methods for calculating this reconstruction value, and many questions always arise, which we answer in our article on Frequently Asked Questions about Reconstruction Value.

One method is the expedited method, which has its limitations. Today we learned the figures for 2025, according to APROSE, which we have transcribed below:

 

APROSE hereby informs, following numerous requests from Members – who have expressed an interest in maintaining access to the traditional method – and notwithstanding the availability to the general public, since March 15, 2021, by the Portuguese Insurance Association (APS), of a simulator for calculating the cost of rebuilding properties (SCRIM), that the values per square meter of the price of housing construction to be applied in 2025 2025, calculated according to the method traditionally accepted by the overwhelming majority of insurance companies operating in Portugal prior to the launch of the aforementioned simulator, are as follows:

  1. a) In zone I: €924.95 – representing an increase of €19.56 perm2 (€905.39 / 2024);
  2. b) In zone II: €808.54 – representing an increase of €17.10 perm2 (€791.44 / 2024);
  3. c) In zone III: €732.53 – representing an increase of €15.49 perm2 (€717.04 / 2024).

It should be noted that, as is well known, despite Law No. 80/2014 of December 19 having repealed Decree-Law No. 329-A/2000 of December 22, under which the Government published annual Ordinances setting housing construction prices per square meter for the purposes of calculating conditional rent – which were not, strictly speaking, mandatory and binding in insurance, but merely a reference – these were, however, also used by insurers to calculate the capital to be insured under various insurance policies because, as a general rule, they corresponded to the values charged by builders for medium-quality buildings and houses, and could be higher (e.g., luxury buildings) or lower (e.g., warehouses or industrial pavilions).

Although the SCRIM simulator is becoming increasingly prevalent and important as time goes by, since it is assumed that its formula takes into account, in addition to the value per square meter of construction, more specific factors such as the type of property structure, energy class, extra values, etc. – and possibly more rigorous – than those that result solely from the methodology inherent in the update coefficients published by the National Statistics Institute (INE), in accordance with the criteria previously adopted – which may continue to be a tool for the intended purpose, among others –, the values, per square meter, of the price of housing construction in force in 2014 – the last year for which Ordinance 353/2013of December 4 set the respective values – were and are successively updated in accordance with the coefficients published by the same INE through a Notice also published in the Official Gazette for the purposes of the annual update of the various types of urban and rural leases, to which the following table refers:

 

Reconstruction value in multi-risk insurance 2025 R2 Insurance 1

It should also be noted that, under the terms of the repealed legislation, Zone I comprises all municipalities that are district capitals (Aveiro, Beja, Braga, Bragança, Castelo Branco, Coimbra, Évora, Faro, Guarda, Leiria, Lisbon, Portalegre, Porto, Santarém, Setúbal, Viana do Castelo, Vila Real, and Viseu), municipalities in the Autonomous Regions (*) (**) and also the municipalities of Almada, Amadora, Barreiro, Cascais, Gondomar, Loures, Maia, Matosinhos, Moita, Montijo, Odivelas, Oeiras, Póvoa de Varzim, Seixal, Sintra, Valongo, Vila do Conde, Vila Franca de Xira, and Vila Nova de Gaia.

Zone II comprises the municipalities of Abrantes, Albufeira, Alenquer, Caldas da Rainha, Chaves, Covilhã, Elvas, Entroncamento, Espinho, Estremoz, Figueira da Foz, Guimarães, Ílhavo, Lagos, Loulé, Olhão, Palmela, Peniche, Peso da Régua, Portimão, Santiago do Cacém, São João da Madeira, Sesimbra, Silves, Sines, Tomar, Torres Novas, Torres Vedras, Vila Real de Santo António, and Vizela.

Finally, Zone III comprises the remaining municipalities on the mainland.

It should also be added that the above-mentioned values per square meter of the price of housing construction are relevant, among other things, for the purpose of determining and setting the capital to be guaranteed under various insurance contracts, namely multi-risk-housing, provided that the insured capital of the property always corresponds to the cost of its reconstruction, with the exception of the value of the land on which it is built, because it is imperishable, and it is up to the policyholder - and, by extension, in the context of providing an excellent service, to their broker - to carry out the corresponding initial assessment.

The insured value for buildings should therefore correspond to the market cost of rebuilding them, taking into account the type of construction or other factors that may influence this cost, or to the cadastral value in the case of buildings for expropriation or demolition. With the exception of the value of land, all elements must be taken into account when determining the insured capital, including the proportional value of common areas, if applicable.

Finally, it should be added that, with regard to the updating of the insured capital, this updating is also the sole responsibility of the policyholder, and the insurer cannot, on its own initiative, make this change. The policyholder may choose between two types of insured capital updating:

  • Agreed Update: The insured capital is annual and automatically updated by applying the percentage indicated for this purpose by the policyholder;
  • Indexed Update: The insured capital is annual and automatically updated according to changes in the IE (buildings), IRH (contents), or IRHE (contents and buildings) indices published by the Insurance and Pension Funds Supervisory Authority (ASF) for each quarter of the calendar year.

(*) Madeira Archipelago: Calheta, Câmara de Lobos, Funchal, Machico, Ponta do Sol, Porto Moniz, Porto Santo, Ribeira Brava, Santa Cruz, Santana, and São Vicente.

(**) Azores Archipelago: The island of São Miguel has the following municipalities: Lagoa, Nordeste, Povoação, Ribeira Grande, Vila Franca do Campo, and Ponta Delgada; The island of Pico has the following municipalities: Lajes do Pico, Madalena do Pico, and São Roque do Pico; The island of São Jorge has the following municipalities: Velas and Calheta; On the island of Flores, there are the following municipalities: Santa Cruz das Flores and Lajes das Flores; On the island of Terceira, there are the following municipalities: Praia da Vitória and Angra do Heroísmo; On the island of Graciosa, there are the following municipalities: Santa Cruz da Graciosa; On the island of Faial, there is the municipality of Horta; On the island of Santa Maria, there is the municipality of Vila do Porto; On the island of Corvo, there is the municipality of Corvo).