Calculating The Rebuild Cost of a Home

When setting up a home insurance policy you will often be asked about the rebuild cost. What exactly is this cost and how can it be calculated?

For the vast majority of us our home is our castle and a vital part of our lives. Therefore, it is important to make sure it's covered if the worst were to happen and a complete rebuild be required. 

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What is the rebuild cost?

This is the amount it would cost to rebuild the property from the ground up. It includes the demolition costs of the property, debris clearing, architects and planning costs for the new structure, as well as materials and labour.

This will vary according to the size, age and type of property you have. If you have recently purchased the property, an up-to-date rebuild cost will be detailed in the deeds or survey. If you do not have this information it is possible to obtain it through a chartered surveyor or by using an online rebuild cost calculator.

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How will I know how much cover I need to rebuild?

Calculating the rebuild cost of your home is a significant part of setting up your home insurance, and it is worth investing some time and money into ensuring the figure you give your insurer is correct. 

It is important that you give the correct rebuild cost to your home insurer because being underinsured can significantly reduce the amount paid out from a claim. This is because of the condition of average clause, which states that if you give a rebuild cost less than it really is the insurer can reduce the amount paid out by the same percentage you are underinsured by.

If your home is made of non-standard materials (not brick-built) or has specialised architectural features the rebuild cost may be higher than its market value. It is recommended that in this situation you contact a chartered surveyor for advice to ensure that you get the right level of cover. For a standard building this can also be obtained from a chartered surveyor or through an online rebuild cost calculator.

It is also important not to over-insure your property as this will simply cost you more money. Keep in mind that the rebuild cost is not the same as either the amount you paid for your property or its market value, and is likely to be less than these prices. 

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Improvements and extensions

If you have recently converted your property you will need to factor this in to your rebuild cost. It is important that you notify your home insurance provider of any updates to the rebuild cost of your home. Failure to do so could mean that your home is not adequately covered. It's recommended that you seek a local surveyor who, for a fee, will be able to provide an accurate rebuild cost of your home.

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Why is the rebuild cost so different to the amount I paid for my home?

The market value of your home is a combination of the actual property itself and the land it is situated on. However, the rebuild cost is essentially an estimation of the price of demolishing an irreparable property and constructing a similar one in the same location, as well as the costs of removing the remains of the old building, planning and architectural costs.

For more information on our home insurance products, please speak to one of our expert advisers on 0344 736 8249.

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Home renovations insurance from Towergate

For more information on the cover Towergate can provide for your property, visit our home renovation insurance webpage.

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About the author

James Cooper is a respected industry leader with over 10 years' experience in the home and property insurance sector. He works across a broad range of insurance product and policy development and delivery, including product development; customer sales and marketing; and P&L accountability.