How do I calculate my rebuild cost?
Your rebuild cost, sometimes referred to as building sum insured or reinstatement value, can be most accurately found on a mortgage valuation. If you do not have one to refer to then you can try the Building Cost Information Service (BCIS) commissioned by the Association of British Insurers. This free service can be found on http://calculator.bcis.co.uk.
If you are purchasing buildings cover, you will need to know the rebuild cost of your home to determine the level of cover you need. As the term suggests, the rebuild cost is the amount that you would hypothetically have to pay to rebuild your property from scratch – for example, if it was destroyed in a fire or devastating flood.
An accurate rebuild figure will help to ensure that you do not over or underinsure your house. This is especially important because if you underinsure and your home does require a complete rebuild, you may need to cover the difference between the stated and actual price. If you overinsure, your home insurance will be more expensive than it needs to be, as your insurer will only pay the cost of the rebuild regardless.
You can usually find a figure for the rebuild value of your home in your mortgage valuation report, on a surveyor’s report, on the deeds to your home and/or on your buildings insurance renewal documents. The best way to accurately calculate rebuild cost for your property is to hire a survey to undertake detailed measurements and prepare a professional Rebuilding Cost Assessment. You can expect to pay about £250 for a basic survey.
Homeowners wishing to determine how to calculate rebuild costs more affordably are advised to use a calculator such as that provided by the Building Cost Information Service (BCIS).
Remember that the rebuild cost of a property is not the same as its value if you were to sell it – it is usually, but not always lower because it does not include the value of the land on which the property stands.
Whether you need to work out how to calculate rebuild costs for your property or a figure is already provided on one or more of the aforementioned documents, it is important not to underestimate the importance of this aspect of purchasing buildings insurance. An accurate figure is vital, as either underinsuring or overinsuring your property can cost you dear.