Re-build value is more than twice actual value

hetttie39

I am sorry if this has been discussed before, I have searched, but couldn't find anything.

My house is worth £165,000 but my re-build value is £450,000 per my original survey.

Therefore my insurance quote is extortionate and only 2 people have agreed to quote me. £1,000 per annum.

It is a victorian end of terrace, 7 beds, 4 storeys (inc basement). The size of the property is about 400 square metres.

My question is if my house is only worth £160k & the mortgage is £100k. Do I really need a rebuild value of £450k???

I am sure it's a stupid question and there is a very good reason, but in my head all i keep coming back to is if my house fell down. I could just buy another (or 2 if my re-build value is correct).

Please be gentle with me, i'm new

dzug1

Rebuild costs for that type of property are often high.

If you insure for half the rebuild value, you won't get it if you have a claim - you'll get half the value insured as you are not covering the full risk. (That could include liability to neighbouring properties as well so what you land up with might be even lower)

Having said that it may be worth getting an up to date assessment of the rebuilding cost.

hetttie39

i bought it for that 2 years ago. I am hoping its an up & coming area in East Riding of Yorkshire. But yes, that's correct. There are plenty of them up here on the market right now.

dunstonh

My house is worth £165,000 but my re-build value is £450,000 per my original survey.

Read the paperwork carefully. Its probably automatic cover upto £450,000. Not actually £450,000.

Blanket plans with sum insureds upto £x are far more common that plans where you set the sum insured.

hetttie39

dunstonh wrote: »

Read the paperwork carefully. Its probably automatic cover upto £450,000. Not actually £450,000.

Blanket plans with sum insureds upto £x are far more common that plans where you set the sum insured.

No. The re-build value came straight from my survey which was carried out when I bought the property in 2007. The blanket value is £500k on my current insurance policy.

But thanks for your response.

Quentin

The blanket value is £500k on my current insurance policy

.


So your premium isn't based on the rebuild cost at all, then!

dogbot

It is a large house, try giving a more specialist broker a call. Home and Legacy are marketed as a high net worth broker but do a lot of old school manual policies so might be more likley to survey the property for themselves. There will be more out there since, as you say, there are lots of similar properties out there. Brokers in general will have access to more specialist schemes and products that might suit your needs better.

If you have a rebuildings value of £500,000 on your current policy then what is the problem? Is the renewal huge?

£450,000 for 7 bedrooms seems not too bad a rebuild cost to me, is it listed? Is there a history of flood or/and subsidance in the area? Trying to think what else is pushing the cost up.

hetttie39

Quentin wrote: »

.


So your premium isn't based on the rebuild cost at all, then!

No, but it is stopping me getting quotes from other people. A lot of insurers won't quote on 7 beds. I have gone through a broker & they say they can't get it under £900 with a rebuild value of £450k & that's going through the specialist firms that will even consider insuring me.

I think i'm stuck with it aren't I? It's so annoying because it's gone up £200 in the 2 years i've been here & I am feeling kind of trapped into the situation.

hetttie39

there is no flooding or subsidence history, although I am near a canal, but the broker said that hasnt affected the policy as its never flooded and there is a big enough distance between my house & the canal.
Its not listed either.

dacouch

As a previous poster noted Insurers either rate by you selecting a sum insured and they then apply a rate to it and you are covered for this amount. The alternative method is they give you a nominal amonunt eg £500000 but take into account the type of house eg Detached, the age and crucially how many bedrooms. The amount of bedrooms is crucial as a 7 bedroom home would normally cost a lot more than a 3 bedroom ame type of property. Hence the 7 bedroom property pays much more than the 3 bedroom property.

A lot of the Insurers that use the second method of rating will not cover properties with more than 5 bedrooms.

If you had a survey that recommended £450000 for the rebuild sum insured and this was not this year then you need to take into account building cost inflation that has been running at between 4% and around 7% for the last few years. It would therefore be sensible for you to add say 5% (Compounded) for each year since the survey as otherwise you willl not be insured for the correct amount to rebuild you home.