How do I work out the rebuild cost?
What is a ‘rebuild cost’?
The rebuild cost is the amount that a property needs to be insured for on your home or landlord buildings insurance policy, and will usually differ quite significantly from the market value of the property.
The total value needs to allow for rebuilding the property to the same specification, including clearing the land and any professional fees incurred in the event of total destruction. The rebuild cost of the property will usually show on the insurance schedule as the ‘declared value’, and needs to be an accurate figure.
How do I work out the rebuild cost of my house?
An insurance provider will usually be unable to provide advice on the rebuild value of a property; therefore it is the property owner’s responsibility to ensure this is correct. It’s also the property owner’s responsibility to ensure the building remains insured for the correct amount.
If you’re unsure on the rebuild cost of your property, the Association of British Insurers provides an online rebuild costs calculator. This allows you to input information, such as the construction type and size of the property, to help with calculating rebuild costs.
However, for some property types – such as listed buildings, blocks of flats or properties that are of a non-standard construction - you may need a formal survey to ensure the rebuild cost is accurate. This is because the construction of these types of properties can vary too greatly for the rebuild calculator to give a precise figure, and therefore a surveyor will be able to provide more accurate advice.
Do I need to update the rebuild cost when my policy renews?
With most insurers, you will not be required to update the rebuild of your property at renewal. Some insurers will also ‘index link’ their home and landlord insurance policies, meaning they will automatically increase the rebuild cost of your property in line with inflation. This takes into account any changes in the re-building cost of your property so you wouldn’t be left unexpectedly under-insured.
However, if the property is undergoing any general improvements or renovation work, this could affect the rebuild cost of your property. If you’re unsure, speak to your insurer as you may need specific renovation insurance in place to protect your property.