Rebuild cost is the amount needed to rebuild your home, including materials, labour, demolition and professional fees.
Rebuild cost is the estimated cost of rebuilding your home if it was destroyed beyond repair. It is not the same as the price you paid for the property, or what it may sell for today.
The Association of British Insurers explains rebuild cost as the cost of rebuilding the property, including labour and materials. It is usually lower than market value, because it does not include the value of the land.
For insurance, rebuild cost is used to help set your buildings sum insured. This is the amount your buildings insurance is based on, subject to the policy terms.
A rebuild cost is not just the cost of bricks, tiles, timber and labour. It may also include demolition, clearing the site, debris removal, professional fees and building control costs.
The RICS reinstatement cost guidance says assessments should include suitable allowances for items such as demolition, professional fees and statutory costs.
Professional fees can include surveyors, architects, engineers and other experts. These costs can matter if a property needs major work after a fire, flood, storm, subsidence or another serious insured event.
Market value is based on what someone may pay for a property. It can be affected by location, demand, land value, schools, transport links and local house prices.
Rebuild cost is about putting the building back. It normally assumes the land is still there. The BCIS guidance on underinsurance says land costs should not be included in rebuilding assessments.
This means rebuild cost can be lower than market value. In some cases, it can be higher. This is more likely with older homes, listed buildings, unusual buildings or homes with non-standard construction.
If your rebuild cost is too high, you may be paying for more cover than you need. If it is too low, you could be underinsured.
Underinsurance can cause problems if you claim. The Financial Ombudsman Service explains underinsurance and says some policies include an average clause. This can allow an insurer to reduce a claim if the property was insured for less than its true rebuild cost.
For example, if a home is insured for only half of its true rebuild cost, the insurer may only pay part of a claim. The exact outcome depends on the policy wording, the claim and the insurer’s assessment.
You should review your rebuild cost when you take out or renew home insurance. You should also check it after major changes, such as an extension, loft conversion, structural work or a change in use.
For many standard homes, a calculator may be a useful starting point. MoneyHelper says free rebuild calculators can help, and a survey from when you bought the property may also include a rebuild figure.
For older, listed, complex or unusual homes, a calculator may not be enough. A qualified surveyor may be able to give a more detailed rebuild cost assessment.
At Got You Covered, we arrange home insurance and landlord insurance through insurers.
We can look at a range of homes, including properties that may need more specialist cover, such as listed buildings, flood-risk homes, unoccupied homes and let properties. We do not underwrite every policy ourselves, and any cover offered will depend on the property, the insurer and the policy terms.
If you are unsure about your rebuild cost, it may be worth getting expert help before choosing your buildings sum insured.
Rebuild cost is the estimated cost of putting your home back after major damage or total loss. It is different from market value and helps set the amount of buildings cover you need.
Getting the figure right matters. If it is too low, a claim could be reduced. If it is too high, you may pay for more cover than you need.
