House Rebuild costs

Davejohno1

I have just been trying to calculate my house rebuild costs for my insurance quote using http://calculator.bcis.co.uk/index.cfm#about - everyone has told me that the rebuild cost will be less than the value of my house. When doing my calculation it has come out over £30000 more - there is nothing special about the house and I think I have got the measurements right. Anyone any thoughts ?

Molonox

Yes I think it is usually less than the value of the property, on the basis that you could probably build an identical property for less than the current market value. Of course the decline in house prices will make the margin between build cost and market value much closer as the prices fall. Why not put down a figure you feel comfortable with. After all, short of disaster on a massive scale, is there really any circumstance under which your whole house could literally need rebuilding? Perhaps you just need to consider a figure that you feel would cover the cost of putting right anything that could happen in the worst realistic case? Would something close to the property value be sufficient?

FlameCloud

Molonox wrote: »

Yes I think it is usually less than the value of the property, on the basis that you could probably build an identical property for less than the current market value. Of course the decline in house prices will make the margin between build cost and market value much closer as the prices fall. Why not put down a figure you feel comfortable with. After all, short of disaster on a massive scale, is there really any circumstance under which your whole house could literally need rebuilding? Perhaps you just need to consider a figure that you feel would cover the cost of putting right anything that could happen in the worst realistic case? Would something close to the property value be sufficient?

This is exceptionally stupid advice. Deliberatly underinsuring a property will only result in claim payments being reduced by the same proportion.

easynotec3

Unfortunately market value gives you no guide whatsoever to the rebuilding cost of the house. You may live in a smal 2 bedroom property in a highly desirable area which may have a rebuild cost of £100,000 but with a market value of £200,000+, on the other hand you could live in a large house with a rebuild cost of £400,000+ but as it is in a less desirable area, the value may only be £200,000.

Also as FlameCloud says above, underinsuring should be avoided at all costs as insurers will reduce the claim by the proportion by which you are underinsured e.g rebuild cost is £200,000, you are insured for £150,000, you are underinsured by 25%, any claim you then make under the buildings section will be reduced by 25%

benood

easynotec3 wrote: »

Also as FlameCloud says above, underinsuring should be avoided at all costs as insurers will reduce the claim by the proportion by which you are underinsured e.g rebuild cost is £200,000, you are insured for £150,000, you are underinsured by 25%, any claim you then make under the buildings section will be reduced by 25%

I agree but it's my understanding that in fact its worse than the above example - if you had a 100% loss on the above - ie £200k of rebuilding was needed then as you're underinsured by 25% the maximum they'll pay out is 75% of £150,000 - ie £120,000 which would leave you £80,000 out of pocket.

Can anyone confirm that I'm right?

cogito

It's my understanding that in the case of a total loss, the sum insured would be paid but that's not much help if you're underinsured to start with. Besides, how many total losses actually occur? Very, very few.

imfedup

depends what is in the policy, some Insurers say that as long as the sum insured is within 85% and they increase it straight away they will allow a certain leeway, but with total losses they may only pay up to the Sum Insured.

Total losses DO occur albeit not every day, but you should never ever ever be underinsured, you will end up paying whether you have a total loss or just a normal claim.

I am fortunate enough that my buildings sum insured is unlimited, which costs me couple pounds more a year but means I dont have to worry.:money:

FlameCloud

Total loss claims are I believe the exception, in that the policy will discharge the full amount of benefit.

VoucherMan

Davejohno1 wrote: »

I have just been trying to calculate my house rebuild costs for my insurance quote using http://calculator.bcis.co.uk/index.cfm#about - everyone has told me that the rebuild cost will be less than the value of my house. When doing my calculation it has come out over £30000 more - there is nothing special about the house and I think I have got the measurements right. Anyone any thoughts ?

I can't get a cost from the BCIS calculator as my house is built of stone, but I've tried a couple of insurance comparison sites and found that several companies, including some of the cheaper ones, have £1,000,000 as standard on buildings insurance. So you'll get the same quote whether you put £75,000 or £750,000 for your re-build cost.