There is not a legal requirement to insure your building, but if you have a mortgage on the property, it is likely your provider will insist you do to cover any damage to the structure of your home.
To get buildings insurance, you’ll need to know the rebuild cost of the property. The rebuild cost is the amount it would cost to completely rebuild your home if it were destroyed beyond repair. It includes the price of labour and materials. This cost is usually lower than your home’s sale price or market value. Basing your policy on your home’s rebuild cost will prevent you from over-insuring and paying higher premiums than necessary. But how do you know how much the rebuild cost would be? We’ll explain how to estimate it.
WHAT IS THE REBUILD COST OF YOUR HOME?
The rebuild cost is the total amount of money that would be required to rebuild your home from nothing if it were destroyed in a disaster such as a fire. It includes the cost of all the materials that would be needed and the labour involved. It’s different from the market value of your property, which takes into account other factors like the desirability of the area you live in and the cost of the land your property is built on.
WHY DO YOU NEED TO KNOW THE REBUILD COST OF YOUR HOME?
You need to know the rebuild cost of your home to be sure that it is insured at an appropriate level. Buildings insurance is essential, both to get a mortgage and to cover the cost of rebuilding after a disaster. But it’s ineffective if you haven’t properly calculated the rebuild cost. If you have underestimated the cost, you won’t be able to recoup all of the expenses of the restoration and will be left to pay part of the bill. If you have overestimated the rebuild cost, you could be paying more than you need to for insurance.
HOW CAN YOU FIND OUT THE REBUILD COST OF YOUR HOME?
There are two ways to find out the rebuild cost:
1. Ask a surveyor. A chartered surveyor can carry out a detailed assessment of your home and provide an accurate rebuild cost, for a fee. This is called a ‘rebuild cost assessment’ and it is the most effective method.
2. Do it yourself. To assess your home value yourself you could use an online rebuild calculator, but this will be less accurate than a professional rebuild cost assessment. It is not advisable to use this in all circumstances.
WHO CAN AND CAN’T USE AN ONLINE REBUILD CALCULATOR?
If you live in a detached, semi-detached or terraced house with one or two storeys, a rebuild calculator can usually be used as an easy way to estimate the cost. Online calculators will be less reliable for flats, listed buildings, buildings with basements, buildings with non-standard construction and houses with special features or unusual building materials. In these cases, it’s far safer to ask a surveyor.
HOW DO YOU USE AN ONLINE REBUILD CALCULATOR?
An online calculator can estimate the rebuild cost of your home based on the floor area. To calculate your home’s floor area, you’ll need to measure around the outside of your home, at ground level. If your home is square, you can simply measure the length and width, and multiply the two. The calculation will be a little more complicated for irregularly shaped homes. If your home has an upper floor with the same dimensions as the ground floor, you can multiply that figure by two to get the total floor area. If your home has an upper floor with different proportions, you’ll need to measure it separately and add the two together. If this calculation is too complex for you to feel confident that you’ve estimated correctly, it’s always better to seek expert help.