When you take out buildings insurance, it’s vital that you can quote the correct amount of money it would cost to rebuild your home. Failure to do so may mean you’re either paying over the odds, or that you end up under-insured and are not properly covered should something go drastically wrong.
Calculating the cost of rebuilding your home may seem daunting but it’s easier than you think. And the estimated rebuild cost is something you need to ensure you get the correct level of cover for your building – and is one of the key figures building insurers use to price a premium. Here’s how to get started.
The rebuild cost of your home is, quite simply, the amount it would cost to rebuild your home should it be destroyed, for example in a fire or a flood.
Some people mistake this for the ‘market value’ of their home. The two are different and the market value is often a fair bit higher than your home’s true rebuild cost. This is because the market value of your home also takes into account its location and local amenities, or the value of the land, and also what it’s estimated someone might pay to buy it.
Your rebuild cost will be affected if your property is made up of what is considered ‘specialist’ materials. These include features such as a thatched or timber roof, if part or all of your roof is flat, or materials beyond a standard ‘bricks and mortar’ build, such as having a glass front. Listed buildings will also require a more specialist professional calculation.
If you live in a flat the cost may also be affected. Living in a block of flats may well mean that should your home be destroyed, the whole building is affected, which making calculating the rebuild cost specifically more difficult.
The Royal Institution of Chartered Surveyors, in association with the Association of British Insurers offers a handy calculator you can use to cost up the rebuild value of your home.
It’s free to register, but you’ll need some specific details measurements to hand including:
If you’re using a price comparison website to choose your home insurance, then most of these will have the calculator built in.
However, the calculator is there for an estimate, so it’s worth getting a survey from a chartered surveyor if you want to ensure accuracy, and particularly important if your home is made of specialist materials, or you live in a flat or maisonette building.
As a standard, assuming your home has had no significant material changes it’s recommended you calculate the rebuild cost every three to five years.
However, if you have had a substantial renovation to your property, for example an extension or loft conversion or a change in build materials to renovate your home, then you should recalculate as soon as you can, as your rebuild cost is probably going to go up. You’ll need to tell your insurer so your rebuild cost can be recalculated in relation to your premium.
Basically, you could end up over or under-insured. If you price your rebuild cost too high (such as using the market value, for example) you could be paying over the odds on your premium each year. But slicing your rebuild cost to try and get a cheaper premium could mean that you’re under-insured, so that if your home does ever need to be rebuilt, you may not be fully covered for the cost to do so,
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