Best Buy Mortgages Glossary - Buildings Insurance Rebuilding
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Buildings Insurance - Rebuilding Cost
Covers the house you are buying against damage - take it out
from the day you exchange contracts.
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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