Rebuild Cost Assessment or Rebuild Insurance Valuation
Whichever description is familiar to you, are you clear exactly what figure you should be insured for and the potential pitfalls of not reviewing this on a regular basis?
In simple terms, we should insure our property for how much it would cost to replace the building should it be destroyed due to a disaster. The cost of replacing the bricks and mortar and associated labour costs, minus the cost of the land.
Many of us purchase a property with mortgage finance, as part of the mortgage offer terms and conditions we have a legal obligation to insure the building and we are told how much to insure it for, this figure is the rebuild cost, not the market value. It is our responsibility as property owners to insure it for the correct amount.
Even if you start off with the correct amount of cover, many building insurance policies are index linked and you end up grossly over insuring the property. If you are over insured, you are paying too much for your buildings insurance.
Many of us take out insurance and do not review it very often, if you are under insured you will only get a proportionate payment of the rebuild costs, not the full amount. In this instance you may well end up having to pay toward the cost of replacing the building.
There are many online rebuild cost calculators, this is fine if your property is in an average priced area, hasn’t had any major renovations or alterations and is not part of a more complex situation involving adjoining buildings or is unusual construction type or listed building.
Most of London and the South East have older larger properties split into flats, often with a share of the freehold where the responsibility of insuring the building is down to individuals. Not only will this be harder to calculate accurately, but you may also have a legal implications from neighbours if you get it wrong.
To ensure you are not exposing yourself to any of the above pitfalls, protect yourself and get professional advice from us, one of our surveyors can put together a more accurate figure with a Rebuilding Cost Assessment and potential save you money and unnecessary difficulties.