Rebuild/Reinstatement Valuation and Insurance.

BucketFull

Hi all.

I understand it is a good idea to obtain a rebuild/reinstatement valuation as part of a house survey when purchasing a property, however, if this information is not provided by the buyer (due to not being included in the survey), how does the insurer determine the rebuild/reinstatement cost? Is this a requirement of insurers?

Are rebuild/reinstatement only surveys available or does it always include a valuation survey? I don't need to know the value of the property; only the rebuild/reinstatement costs, which I'm assuming insurers require? I am aware there are surveyors who provide customised surveys, however, I have found a survey that I like but the firm doesn't do the rebuild/reinstatement survey as part of that survey, so I was wondering if I could just purchase it separately from another surveyor, but do not wish to include the value of the property.

At which specific point during a cash purchase does the buyer become responsible for any issue that occurs to the property/contents? In other words, what is the soonest that the buyer can take insurance out on the property to avoid the possibility of having to pay for any issues due to not being insured? Is it when the contracts have been exchanged or is it when all of the money has been paid and the key is handed over or is it at some other stage?

Thanks for any advice.

user1977

Some insurers don't need you to give them a figure - they'll know roughly how much a house of x size in area y is likely to cost to rebuild, and only a tiny minority of claims involve significant rebuilding anyway.

Generally (in England & Wales) the contract will state the buyer is taking on the risk of damage from exchange. Hopefully your solicitor will be explaining stuff like this to you.

anselld

There is a calculator here ... https://abi.bcis.co.uk/

There is no obligation on the vendor to provide this, most would not necessarily know anyway.  You could ask your own surveyor to give an estimate.  It is not an exact science anyway and so long as you get a sum in the right area an insurance company is not going to argue in the event of any claim.

Insurance liability starts at exchange of contracts normally.  (except new build)

BucketFull

Thank you for your helpful replies.

So, the insurer will fully pay to rebuild even if the sum you provided to them turned out to be less than the actual cost to rebuild if a rebuild was ever required?

Yes, I just came across the abi website whilst reading about the topic here on moneysavingexpert! I do wish free services would stop require registering!

Thanks.

anselld

BucketFull said:

So, the insurer will fully pay to rebuild even if the sum you provided to them turned out to be less than the actual cost to rebuild if a rebuild was ever required?

No.  If you are found to have underinsured they could reduce the value of any claim, even if the claim was not for a full rebuild.  So you do need to get it approximately right.

canaldumidi

BucketFull said:

So, the insurer will fully pay to rebuild even if the sum you provided to them turned out to be less than the actual cost to rebuild if a rebuild was ever required?

No. If you insure for a rebuild value of £X, and the property burns down and costs £X+Y to rebuild, the insurer will only pay £X. You will have to find the balance yourself.

Having said that, some insurerers, but not all, do not require a specific re-build figure, and will undertake to cover the full cost of re-build up to, say, £500K or £1m (depending on the property and the insurer).

Most surveys in my experience will include a re-build value. If your surveyor does not, find a different surveyor.

The RICS website also has a (somewhat crude) calculator. If using this my advice would be to use it as a guide, and add a few £K to the insured value. Better to be over-insured than under-insured.

JGB1955

Our house is 'worth' £400K.  It's detached, so the rebuild cost (including site clearance) is probably £280K... or £500K if (when) rebuild costs escalate....  Just find a site that covers you up to £1M (unless you're already in those realms)!

A fair amount of the value of your property is the land it stands on....

martinbainbridge1975

as above the RICS website may be worth a look to get an estimate of the required figure

there are a lot of blanket policies out there with 500k, £1million and unlimited covers on buildings

Slithery

JGB1955 said:

Our house is 'worth' £400K.  It's detached, so the rebuild cost (including site clearance) is probably £280K... or £500K if (when) rebuild costs escalate....  Just find a site that covers you up to £1M (unless you're already in those realms)!

A fair amount of the value of your property is the land it stands on....

That completely depends on the type of property and the area.

For example a terraced house in a run-down area may only cost you £50k to buy but easily have a £300k+ rebuild cost by the time the costs of shoring up the adjacent properties, site clearance and rebuild are taken into account.

stuart45

The free calculator tends to underprice the real costs. The one you pay for includes all the drainage and perimeter walls etc.
A lot of people are under insured for a total rebuild.

BucketFull

Thanks for all the helpful replies!

Is there any difference between purchasing a survey from surveyors who offer the rebuild/reinstatement costs without visiting the premises and obtaining a free quote from the RICS ABI website myself? Do such surveyors simply refer to the RICS ABI website themselves or do they do anything special that produces a more accurate/reliable quote?

Thanks.