When taking out buildings insurance you will need to know your home's rebuild cost to decide how much cover you need.
Most buyers need to take out a mortgage when they are buying a new home, and a mandatory requirement will be buildings insurance.
But to understand how much buildings insurance you need, you also need to work out your home's rebuild cost. There are two ways to do this...
1. Hire a surveyor
The best way to get an accurate rebuild cost is to instruct a chartered surveyor to carry out detailed measurements of your house and then prepare a professional Rebuilding Cost Assessment.
However, using a surveyor will come at a cost, so read our guide to Choosing a surveyor first.
2. Use a rebuild calculator
The second option is to use a rebuild calculator. The Royal Institution of Chartered Surveyors (RICS) provides one through its Building Cost Information Service, although you will need to register for free.
Though simple and free to use, the drawback is that you only get a rough idea of your home's rebuild cost.
This is important to bear in mind because if you under-insure and your home requires a rebuild, you would only be paid up to the amount your home insurance covers, leaving you to cover any shortfall.
You could also make the mistake of over-insuring, resulting in excessive monthly premiums. A common error is to insure for the full amount paid for your home or its current market value. Both are likely to be much higher than the rebuild value.
To use a calculator you will need your home's external floor area for both upstairs and downstairs. To find the ground floor area, go outside, measure the length and width of the downstairs walls and multiply these figures together.
If the upstairs is identical to the downstairs, simply double the ground floor area. If different, calculate the upstairs area separately and add it to the downstairs result.
Calculators are unlikely to be suitable for finding the rebuild cost of flats because construction methods vary too greatly. A surveyor may be your best bet in this instance.
However, because most flats are leasehold there should already be buildings insurance in place through the management company or building owner, and paid for via service charges. If you have a lease, check the contract just to make sure.
A basic calculator is helpful for detached, semi, terraced, detached bungalow and semi bungalow of standard construction. But for more complex properties, such as these:
- Houses not built of brick
- Properties with basements, cellars or more than two storeys
- Houses with special design features
- Houses other than of average quality
- Houses containing hazardous materials within their construction, such as asbestos
- Historic or listed buildings
you should look to a surveyor for a clearer rebuild costs.
How often should you check rebuild costs?
It's important to periodically check that your buildings insurance still covers the rebuild cost. Some insurance providers automatically do this by 'index linking' the policy, so the premiums adjust in line with fluctuations in rebuild costs.
Remember, any extensions to the property will also likely increase the rebuild cost.