Cost of rebuilding insurance

Luke451

Hello,

accidentally, I forgot to change the cost of rebuilding insurance, so they quoted me automatically 60% more than the value of the house...

Let's assume that the house is worth 300k, it's basically 480k cover, 60% more.

How can I properly estimate such cost?

I mean, it includes the demolition, removal and then rebuild.

I don't think that 60% in addition is enough, just for the time necessary to do the entire job and number of people/vehicles/material involved, what do you think?

tacpot12

+60% might not be enough. You can register here to use the BCIS Free Rebuilding Cost Calculator: Login or Register (bcis.co.uk)

This will give you a good idea of what figure you should be insured for, but I would recommend over insuring slightly (+10%?) to allow for further cost inflation over the next 12 months, and reduce the risk that the calculator has underestimated the cost of rebuilding your specific home.  

Lorian

You wouldn't be rebuying the land

eddddy

Luke451 said:

Hello,

accidentally, I forgot to change the cost of rebuilding insurance, so they quoted me automatically 60% more than the value of the house...

Let's assume that the house is worth 300k, it's basically 480k cover, 60% more.

How can I properly estimate such cost?

I mean, it includes the demolition, removal and then rebuild.

I don't think that 60% in addition is enough, just for the time necessary to do the entire job and number of people/vehicles/material involved, what do you think?

Often, the rebuild cost of a house is much less than it's market value - but perhaps your house is an exception.

(Builders wouldn't bother building new houses, if it cost more to build them than the final market price of the house. Plus they had to buy the land in the first place.

If the market value of a newly built house is £300k, the rule of thumb is that it probably cost about £100k to build. But as you say, maybe you should add a bit to that for demolition, clearing the site, etc.)


But some older houses, perhaps built using 'old-fashioned' building materials and 'old-fashioned' building methods might be more expensive to rebuild. Especially, for example, if they are part of a terrace.


Did you get a valuation or survey done when you bought the house? Normally that would have stated the rebuild cost at that time - so you could apply an inflation adjustment to that.

kingstreet

If you aren't sure you can calculate this accurately, consider bedroom-rated cover where there is a flat sum insured of perhaps £500k, £1m or even unlimited. Premiums are based on number of bedrooms rather than sum insured.

FreeBear

eddddy said: But some older houses, perhaps built using 'old-fashioned' building materials and 'old-fashioned' building methods might be more expensive to rebuild. Especially, for example, if they are part of a terrace.

Rebuilding one property in a terrace isn't going to cost much more - You still have two walls to work off.

The problem comes if it is only a partial loss, a listed building, or within a conservation zone (including a National Park). The local planning department (and conservation officer if involved) could impose some restrictive conditions such as traditional materials that would inflate the costs.

Luke451

Out of curiosity, is it not quicker for the insurance to close my mortgage and give me another home?

Considering that the would be paying the rent up to 100k total...

Not necessarily they will save money, but at least they close the long burocratic work quickly...

daveyjp

Rebuild cost and market value are completely unrelated.

user1977

If you're buying with a mortgage, then the cover needs to be for at least the amount required by your lender. That normally comes with their valuation - have you not seen a figure?

There are also insurers who don't place a limit on the cover (they will cover for whatever it takes to rebuild e.g. a 3 bed semi in postcode X, on the basis that they know roughly what that ought to be). Bear in mind that the vast majority of claims are not for fully rebuilding the property, so the figure isn't likely to make a huge difference to the premium.

Luke451

user1977 said:

If you're buying with a mortgage, then the cover needs to be for at least the amount required by your lender. That normally comes with their valuation - have you not seen a figure?

There are also insurers who don't place a limit on the cover (they just know how much it ought to take to rebuild e.g. a 3 bed semi in postcode X). Bear in mind that the vast majority of claims are not for fully rebuilding the property, so the figure isn't likely to make a huge difference to the premium.

Thanks, so what they would rebuild? Just the walls and roof?

user1977

Luke451 said:

user1977 said:

If you're buying with a mortgage, then the cover needs to be for at least the amount required by your lender. That normally comes with their valuation - have you not seen a figure?

There are also insurers who don't place a limit on the cover (they just know how much it ought to take to rebuild e.g. a 3 bed semi in postcode X). Bear in mind that the vast majority of claims are not for fully rebuilding the property, so the figure isn't likely to make a huge difference to the premium.

Thanks, so what they would rebuild? Just the walls and roof?

No, the whole thing, ready to move (back) into.