In a worst case scenario, for example if your home was completely destroyed by a catastrophic event such as fire or explosion, your insurance company would be responsible for rebuilding your home and paying for it.
So it stands to reason that your insurer needs to know how much this will cost. As the policyholder, it will be your responsibility to obtain the correct rebuilding cost for your home.
It’s important to give an accurate figure for house rebuilding costs so you are not over or under-insured.
The rebuild cost is the amount it would cost to completely rebuild your home from scratch if it was destroyed beyond repair. The cost will vary according to the size, age and type of property you have.
It includes the price of:
The rebuild cost doesn’t take into account:
the value of the land
factors that affect house prices such as transport links and school catchment areas
The rebuild cost will be different from the market value or the sale price of your home.
You need to know your home’s rebuilding costs for insurance purposes.
When you buy buildings insurance, or a combined buildings and contents insurance policy, the insurer will ask how much it will cost to rebuild your home.
This is because a buildings insurance policy, or combined policy, covers you for structural damage to your home, and the cost of rebuilding it if it is completely destroyed.
It is worth investing some time, and possibly money, into ensuring the figure you give your insurer is correct.
Under-insuring your home, whether deliberately to reduce your insurance premium or unintentionally, can have significant consequences.
It could mean that your insurer will reduce the claims payout by the percentage that your property is underinsured by.
For example, if you told your insurer the cost of rebuilding your home was £150,000 but in actual fact it was £200,000, you would be underinsured by 25%. So if your house was destroyed and you had to make a claim, it could be reduced by 25%.
In the same way, if you overestimate your home’s rebuild cost you could end up paying more for your home or buildings insurance than necessary.
How you should find out your home’s rebuild cost depends on whether you own:
a standard brick-built house
a home constructed from non-standard materials
a listed building
If you live in a house constructed from standard materials, such as bricks, there are two ways to calculate its rebuild cost:
use the RICS’s Building Cost Information Service’s house rebuilding cost calculator
hire a chartered surveyor to carry out a professional assessment
If you have recently bought your home, the rebuild cost will be on your mortgage valuation or deeds.
You can use the RICS’s Building Cost Information Service (BCIS) to calculate the cost of rebuilding your house for insurance purposes.
To use the calculator you need to register with an email address and accept the terms and conditions of use.
Once registered, you will be able to use the calculator 4 times in any 12-month period.
You’ll need to input the following information:
whether the property is a house, bungalow, or flat
its style (i.e. detached, terrace etc)
the number of storeys
the postcode of the property
the year it was built
the external floor area (in metres squared or feet squared)
the number of bedrooms and bathrooms the property has
whether it has garage space or a cellar
the wall type and roof type
whether it’s a listed or unusual property
The calculator will then give you a rebuild figure for rebuilding your home to its existing design in modern materials, using modern techniques.
The figure given will cover rebuilding the structure of the property including the foundations, walls, roof, floors, doors and windows, built-in fittings (i.e. kitchen and bathroom), plus installation for heating, hot and cold water, gas, electricity, lighting and ventilation.
However, it won’t include things like loose fittings and furnishing such as carpets and cookers.
It’s easiest to measure your home’s area from the outside.
Measure the length and width of the ground floor walls, then multiply these two figures together.
If the upstairs is an identical size to the downstairs, simply double the ground floor area. If it’s different, or you have more storeys, calculate each floor separately and add it to the ground floor result.
Most homes are built with brick or stone walls with a roof made of slate or tile.
A non-standard construction is basically anything that falls outside of this definition. The construction might include:
glass, plastic or fibreglass
concrete, metal, wood or flint stone walls
asphalt or shingle
steel or timber frames
corrugated iron walls or frames
prefabricated concrete houses
wattle and daub
If your home is made of non-standard materials, its rebuild cost may be higher than its market value.
If you live in a home made of non-standard materials, you should contact a chartered surveyor and get a survey done to calculate rebuilding costs.
To find out if you live in a listed building you should visit the relevant website for your country and conduct a search.
Northern Ireland: https://www.nidirect.gov.uk/articles/finding-a-listed-building
If you live in a listed building or one with special architectural features, you should contact a chartered surveyor to get a survey done to calculate rebuilding costs.
You will need to hire a chartered surveyor if:
your house is built from non-standard materials
you live in a listed building
you want more details than provided on a basic BCIS calculation
You should visit the RICS website to find a chartered surveyor. You can search for a surveyor near you by entering your town or postcode.
The surveyor will carry out detailed measurements of your home and then prepare a professional Rebuilding Cost Assessment. This will cost about £250.
Most flats are leasehold. If you own a leasehold flat in a block of flats, the buildings insurance will normally be the responsibility of the freeholder or their managing agent.
However, leaseholders pay for buildings insurance via service charges.
If you own a share of the freehold of your block, you and the other leaseholder are jointly responsible for the buildings insurance. In this situation you’d normally take out one buildings insurance policy for the entire block, and share the cost.
It’s best to speak to a surveyor or insurance broker for advice about this.
With most insurers, you won’t be required to update the rebuild of your property at renewal.
Some insurers will ‘index link’ their buildings insurance policies, meaning they will automatically increase the rebuild cost of your property in line with inflation. This should prevent you from being under-insured
If you make any improvements or renovations to your home – e.g. an extension, a loft conversion or a new kitchen – you should re-calculate your home’s rebuild cost to make sure you are fully covered.