Mortgage Glossary: Buildings Insurance - rebuilding cost

Buildings Insurance - rebuilding cost

It is common sense to take out "building insurance" when you purchase a property. In any event, if you're taking out a mortgage, your lender will insist on it. You will need to know the rebuilding cost of your property so that you may insure for the correct amount.

You may make your own estimate by finding out the external floor area of your home - both upstairs and downstairs, and then multiplying this number by the estimated building cost per square foot or square metre. Depending on where you live and what type of property you live in, rebuilding costs currently vary between £58.50 and £112 per square foot.

The sum insured under a buildings policy must be the full rebuilding cost of the home. Do remember that the market value of your home or the Council Tax band valuation actually has no direct relationship to the rebuilding cost.

You may instruct a member of the Royal Institution of Chartered Surveyors to prepare a professional Rebuilding Cost Assessment for insurance purposes.

Alternatively, you could work out the cost yourself. The RICS has a detailed "Guide to House Rebuilding Costs" published annually by its Building Cost Information Service. It contains 16 main tables of costs for four regional groups, five house types, three sizes of house and three quality specifications. However, it is quite pricey at £52.50.

You may, in the first instance, want to take a look at the Association of British Insurers" less detailed free access Buildings Insurance Calculator.

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