When you get a buildings insurance quote, most providers will ask you for an estimated rebuild cost. But what exactly does that mean, and how do you work it out?
A rebuild cost is an estimation of how much it would cost to completely rebuild your home from the foundations up, including labour and materials.
The rebuild cost is usually less than the market value or sale price as it doesn’t include the value of the land underneath – but that isn’t always the case.
What's the cost to rebuild my house?
The rebuild cost is the amount of money needed to reconstruct your home from the foundations up.
It can be broken down into two main factors:
- The cost of materials
- The cost of labour
How do I find out my property’s rebuild value?
The rebuild figure will consider the:
- type of property
- location
- construction materials
If you own a standard home built with brick, you can either use a rebuild cost calculator or hire a surveyor to give an accurate rebuild cost.
Contact a surveyor if your home’s made from non-standard material or has special architectural features like a thatched roof.
Why is the rebuild estimate so important?
If you give a really inaccurate estimate, you could be paying more for your buildings insurance than you need.
Or, on the other hand, you might not have the right cover and if you need to make a claim, you might not have enough to cover you.
It’s important to remember that if the actual cost is higher than the figure you gave in the quote, your insurer won't be liable for the remaining difference, but you may be when you make a claim.
Why is the rebuild cost different from the market value of my home?
Your rebuild cost is the cost of rebuilding your house from scratch. It includes things like the cost of labour and materials, but doesn’t include the value of the land your house sits on
On the other hand, market value considers location, demand, the condition of your house, and the local real estate market.
I live in a flat – how do I calculate my rebuild cost?
Flats and maisonettes are constructed differently to houses so if you live in either, it would be best to call a surveyor for an accurate valuation.
If you live in a leasehold property, it’s worth checking the conditions of your lease before you pay for a surveyor.
Many flats and apartments in the UK are leasehold properties, meaning your landlord or the building owner will already have buildings insurance in place.
I’ve renovated, should I update my rebuild cost?
If you’ve converted your property this’ll need to be factored into the rebuild cost.
It’s important you let your home insurer know about any updates to the rebuild cost of your property.
I'm a landlord
If you’re a freeholder, the process is the same and you will still need to know the total cost of your rebuild when getting an insurance quote.
In landlord insurance terms, this is often known as ‘buildings sum insured’.
Again, you’ll need to let your insurer know if you are doing any renovations or have made any significant updates to your property.
