When taking out buildings insurance you will be required to provide the property’s rebuild cost, which determines the value for which your property should be insured. The two most common methods of establishing your rebuild cost are to hire a surveyor or to use a rebuild calculator.
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What is the standard sum insured for a building?
Firstly, let's take a quick look at what you’re going to be insuring. The rebuild value of a property should be the total of:
- The full cost to rebuild or reinstate as new
- Allowances for professional fees e.g. Architects and Surveyors
- Allowances for costs to meet Local Authority requirements
- Debris removal costs
In addition to the structure, a buildings policy covers permanent fixtures and fittings such as baths, toilets, fitted kitchens, bedroom cupboards and interior decorations. Buildings insurance usually extends to include outbuildings such as garages, garden sheds, greenhouses, boundary walls, fences, gates, paths, drives and swimming pools, so this should also be taken into consideration.
Hire a surveyor
The most effective way to obtain an accurate rebuild cost is to instruct a chartered surveyor to carry out detailed measurements of your property and prepare a professional Rebuilding Cost Assessment. We always recommend that you obtain a survey by a chartered surveyor if you are unsure of the correct sum insured, but we appreciate that in many cases there aren’t sufficient funds available for this.
Use a rebuild calculator
An alternative option is to use a rebuild calculator. Though simple and free to use, the drawback here is that you only get a rough idea of your property’s rebuild cost. This is important to bear in mind, as if you underinsure a property which subsequently requires a rebuild, you would only receive financial settlement equivalent to the amount insured for, leaving you to cover any shortfall.
Similarly, don’t make the mistake of over-insuring (i.e. insuring for the market value, which is likely to be much higher than the rebuild value); you only need to insure a property for its rebuild value.
Important: The calculator is based on five house types (detached, semi, terraced, detached bungalow, semi bungalow) of average quality and standard construction.
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