The rebuilding cost or reinstatement value of your property is the amount it would cost to rebuild if it was destroyed. In addition to the more obvious costs of materials and labour, it also requires provision for professionals’ fees – such as architects and surveyors, removal of debris etc
Rebuild costs should not be confused with your property’s market value as they are not the same. Market value is generally higher than the rebuild cost because it includes the land on which your property sits (land and location can account for over 25% of a property’s market value). Rebuild costs do not include the value of the land because when a building is destroyed often the land is not affected.
Why do you need to know the rebuilding costs?
The rebuild cost is how much your property should be insured for and is the amount your insurers will need to pay if it is destroyed. As the owner of the property, the onus is on you to get the rebuild cost figure right. If it’s calculated too low then you may be underinsured. This means that if your property needs to be rebuilt your insurers will not be able to pay the full mount and you will then have to pay the shortfall between the amount the insurance company pays out and the total cost of the works. If it’s calculated too high, then you could be paying too much for your insurance.
How can we help?
Our Risk Manager is on hand to offer help and advice and is qualified to calculate the rebuilding costs of both commercial and domestic properties. Sometimes this is chargeable and sometimes the service is free of charge but either way you will always be provided with a full report.
Can I calculate them myself?
Absolutely, to get a general idea for yourself, speak to a local builder about the building cost per square foot for a property of your type in your area. Then calculate the total square footage of your property, and multiply by the building cost per square foot. Remember to include all storeys, any outbuildings and any significant improvements or upgrades you may have carried out.