At Brunel Insurance for People, we know how important it is to ensure that your house is insured for the correct value. The ‘buildings sum insured’ must be the rebuilding cost not the market value – Here’s why getting it right matters.
Key Points to Remember
1. Rebuild Cost vs. Market Value:
The rebuild cost is what it would take to reconstruct your home from scratch, covering; materials, labour and all other associated costs such as professional fees. This is different from your home’s market value, which includes factors like land value and location.
2. Accurate Values Matter:
– Under valuing : Could leave you underinsured, creating a shortfall in cover and claims not being fully paid.
– Over valuing: Could mean that you pay too high an insurance premium.
3. Special Factors to Consider:
Homes made from non-standard materials or listed buildings will have higher rebuild costs due to specialist requirements.
Key Influencing Factors:
• Property Type: Multi-story houses, bungalows, or flats have varying costs.
• Style and Size: The larger the house the larger the rebuilding cost but also the type will affect the value e.g. detached, semi-detached, or terraced.
• Age and Special Features: Listed buildings or older properties may require specific materials or expertise.
• Materials and Labour Costs: Non-standard materials or specialist builders can increase costs.
• Additional Costs: Planning permissions, architects, and debris clearing should also be factored in.
Rebuild Cost vs. Market Value
The market value reflects what buyers are willing to pay for your home, including land value and nearby amenities. In most cases, this is higher than the rebuild cost. However, for homes with unique construction materials, the rebuild cost may exceed market value.
Always insure your home based on the rebuild cost, not the market value.
Why Accurate Rebuild Costs Are Essential
• For Your Home Insurance: Your insurer uses the rebuild cost to calculate premiums claim payments.
• For Mortgage Approval: Many lenders require you to correctly insure the house buildings as part of the loan agreement.
Overestimating Risks:
Overvaluing increases your premiums unnecessarily, costing you more in the long term.
How to Calculate Your Home’s Rebuild Cost
• Use online tools: The BCIS rebuild cost calculator is a useful tool for standard construction properties.
• Use a professional valuer: For the most accurate figure for whichever type of property you have Brunel Insurance for People can put you in touch with a firm that can value your property – this is usually at a cost of £195.
Click Here to find out more about the rebuild cost assesment here
What You’ll Need:
• Property type (detached, semi-detached, terraced).
• Number of floors and bedrooms.
• External floor area (calculated by multiplying the length and width of each floor).
For flats or maisonettes, check if the freeholder has buildings insurance, as the cost may already be included in your service charge.
Will Extensions and Renovations Impact Rebuild Costs?
Yes! Adding an extension, conservatory, or loft conversion increases the rebuild cost. Inform your insurer of any renovations to ensure your policy reflects the updated value.
Protect Your Home with Brunel Insurance for People
Let us help you find a policy tailored to your needs. Contact us today for expert advice and Home Insurance quote!
