One thing many people forget is that taking out buildings insurance doesn’t necessarily mean your property is adequately covered. Why? Because filling in the insurance forms with the correct house rebuilding costs is key to being properly insured. Declare the wrong value and you could find you are underinsured if you need to make a claim.
Underinsuring and over-insuring
If the rebuild value you put on the form is lower than the real cost of reconstruction, your premium may be low but you will be under-insured. Therefore, in the unlucky event that you need an entire rebuild, your insurers will only pay up to the amount you are insured for, leaving you to cover the shortfall from your own pocket.
Likewise, make sure you don’t over-insure your home as your policy will simply cost you more money. Bear in mind that the amount you paid for your property and its market value are not considered by your insurers and are likely to be far more than the actual cost of rebuilding. Rebuilding costs are calculated in accordance with the Rebuilding Cost Index provided by the British Royal Institute of Chartered Surveyors, or the European equivalent.
Improvements and extensions
Don’t forget to adjust the rebuild value on your policy after making improvements or extensions to your home. If you don’t reflect this in your policy cover amount, you could well find your buildings are not adequately covered.
You will need to ensure the rebuild value is enough to cover the cost of rebuilding your property, taking into account inflation. Some insurers do this automatically by index linking your policy in line with inflation each year. Either way, make sure your policy keeps up with current values so that you are not out of pocket should you need to make a claim.
Unfortunately, most people aren’t qualified to value their property’s rebuild costs accurately so they either use a rebuild calculator or, better still, they hire a surveyor.
Hiring a professional chartered surveyor is generally regarded as the best way to get a reliable rebuild value for home insurance purposes. Costing around £200, surveyors carry out detailed measurements and assessments to come up with an accurate Rebuild Cost Assessment. To find a professional RICS surveyor near you, click here.
Rebuild cost calculators
Using an online rebuild calculator is a more economical way to get a rebuild value as it is free of charge. However, the building costs are less accurate compared to using a surveyor and, as such, give only a rough idea of your house building costs, leaving you open to errors should you need to make a claim.
Rebuild calculators are based on five house types: detached, semi-detached, detached bungalow, semi-bungalow and terraced house, and presume an average quality of construction. For any other type of property such as; maisonettes, flats, listed buildings, homes not made of bricks or those with basements or with special design features, you will need to hire a surveyor.
Before you use the rebuild calculator, you will need to have handy an accurate figure for the surface area of your property. To measure this, go outside, measure the length and width of the downstairs of your property and multiply the two amounts together. If upstairs is identical in size to downstairs, simply double the figure. If not, then you will need to calculate the upstairs area separately and add to the ground floor total.
These tips are non-advisery and are merely meant as a general guide to estimating rebuild costs when taking out buildings insurance. For more information, please consult your insurers.