Estimating 'rebuilding' cost

WatlingA5

The question is just that – how do you work out rebuilding costs for building-insurance purposes?

Is there some sort of formula for estimating the cost less the value of the land? We want to find a figure that doesn't leave us either under- or over-insured.

Another question – we've been told we have to insure the new house from the date we exchange contracts, but still have to keep the insurance on our present house until completion. Seems to me that every house in the chain is 'double insured', so wouldn't that cause problems if something did happen?

4nnabella

Have you had a home buyers report done? Ours included a rebuilding cost of the property at the back.

davidmcn

WatlingA5 wrote: »

how do you work out rebuilding costs for building-insurance purposes?

Normally you don't, because the surveyor has done that for you. Don't you have a valuation report? There isn't a general formula for calculating it yourself.

kingstreet

On the latter, no don't worry about double insurance. The latest version of the solicitors' standard conditions of sale have the purchaser accept liability from exchange so your insurance must start from then.

The surveyor doing the inspection for you or lender will normally include the rebuild cost, otherwise you can register and use the ABI calculator;-

http://abi.bcis.co.uk/

TBH most of us use bedroom-rated cover now, rather than work out the actual rebuild cost. Contracts have a flat £500,000 or more regardless so you should have no risk of under-insurance. Premiums are based on postcode and number of bedrooms, rather than sum insured.

G_M

If you have a mortgage, the mortgage valuation will show the rebuild cost as well as the market value.

Or use the RICS calculator here.

Many insurance policies don't need an actual rebuild value, but will insure 'up to £500,000 or £1m'.

jjlandlord

If your insurance does not include a large cover by default (up to 500k or 1m as mentioned, assuming you house is worth much less to rebuild;) ) it is wise not to insure up to the estimated amounts shown on the survey(s) but to use the largest of these estimates and to add, say, 10-20%, and to re-assess whenever you need to re-insure.

It probably won't make much difference on the premium but will ensure you are well covered.

WatlingA5

Thank you all - 'buttons' will be clicked

We're lucky enough not to need a mortgage but we got a structural report done by a surveyor in the area. Searched through it again but can't find an estimate of rebuilding cost.

Looking at the renewal for our present insurance the estimated rebuild cost is way over the BCIS estimate (thanks for that link).

:beer:

G_M

WatlingA5 wrote: »

We're lucky enough not to need a mortgage but we got a structural report done by a surveyor in the area. Searched through it again but can't find an estimate of rebuilding cost.

I repeat

If you have a mortgage, the mortgage valuation will show the rebuild cost as well as the market value.

A Valuation is not the same as a survey.

However, you could have instructed your surveyor to give you a market and/or re-build valuation at the same time as the survey.

eddddy

WatlingA5 wrote: »

The question is just that – how do you work out rebuilding costs for building-insurance purposes?
...

An interesting question (at least it's interesting to me!!!) - on one hand insurers ask for "rebuilding costs" or "reinstatement costs" - but should an allowance be added for the other stuff covered in the buildings section of a policy?


Here's an extract from an AXA policy, where they talk about "Buildings Cover Limit" rather than "Rebuilding cost":

Within your overall limit (unless a different limit or sub limit is highlighted) the following covers are included:

1. Architects fees / Debris clearance Following a valid claim for damage under buildings Causes below, we will also pay:

• Architects, surveyors, consulting engineers and legal fees, but not fees for preparing a claim;
• the cost of clearing debris from the site or demolishing or shoring up the buildings;
• the cost to comply with government or local authority requirements but not if the order predates the loss or damage.

There was an awful case posted a while back, where a house's foundations were undermined - and the insurers paid a total of £99k (I think) for engineers fees, shoring up costs and ultimately demolition costs. Having paid out £99k, there was insufficient cover left to pay for rebuilding.

The insurance experts quoted case law etc, that suggested that the policyholder would win if they complained to the FCA. But who want's the added stress of a complaint to the FCA when your house has just fallen down! Maybe it's sensible to add an allowance over and above the rebuilding cost, just in case?

(FYI this was the thread: https://forums.moneysavingexpert.com/discussion/4853145)

davidmcn

I think the surveyors' standard definition of rebuilding costs includes site clearance, professionals, etc. Obviously they might not always get it right.