How To Calculate The Rebuild Value Of Your Home
It’s an essential element of arranging Buildings Insurance, but over or under-valuing your property could land you with an eye-watering bill. Shene Insurance explains how best to calculate the rebuild value of your property.
What does ‘rebuild value’ mean?
The rebuild cost of your home is different to its market value. It is the amount it would cost to completely rebuild your home if it was destroyed beyond repair. This is usually lower than the price your home would sell for.
Your buildings insurance amount needs to cover the rebuild costs, or in the event of your property needing a complete rebuild you’d end up paying the shortfall. This is ‘under-insuring’, and can happen when the rebuild value is guessed wrongly. Basing your policy on your home’s correct rebuild cost will prevent you from paying too much, or ‘over-insuring’.
How do I calculate it?
To calculate the rebuild value you will need to know the external floor area for both upstairs and downstairs. For a property where all the floors have the same dimensions, this is simple – go outside and measure the length and width of the ground floor walls, then multiple those two figures together.
The ABI (ABI) offers a Public Rebuild Calculator on its website. Simply enter your property information and calculate the rebuilding cost of your home, up to four times in a 12 month period.
Your rebuild value should include any professional fees and the cost of clearing the site. If you have recently bought a new home, the rebuild cost should be stated on your mortgage valuation or deeds.
Will I ever need to re-calculate it?
Yes. If you renovate your home or build an extension, you should recalculate the rebuild cost and speak to your broker to ensure your insurance would still keep you covered. It’s a good idea to review the rebuild cost of your home every time you renew your insurance.
If your home is unusually shaped, a heritage property, built from non-standard materials or has special architectural features, its rebuild cost may be higher than its market value. The best way to calculate the rebuild cost of unusual properties is to hire a chartered surveyor who will be able to carry out a professional assessment.
Similarly, the rebuild cost of commercial premises should have been provided by your surveyor when you bought the property. Extensions, alterations and property use changes can all affect the rebuild cost and make it worth recalculating. To do this, contact a professional approved by the Royal Institute of Chartered Surveyors.
If you have any questions, just get in touch with Shene Insurance on 020 8878 7822.