Calculating Rebuild Cost
If you want to make sure you're paying for the correct amount
for building insurance cover, you'll have to be prepared to
calculate the rebuilding cost of your home in order to make sure
you have the right amount of buildings insurance.
The cost of rebuilding the property will not be the same as the
market value. Surveyors and insurers have some rules of thumb to
help you work out what your property is actually worth - but to
be absolutely sure you should get a surveyor's report. If you're
buying a property, the lender's valuation report will also
contain a rebuilding cost figure.
Broadly speaking to work out your rebuilding cost, you should
know the building dimensions which can be calculated by
multiplying the length and width of the property in feet by
the number of storeys.
1. Calculate the ground floor area:
ground floor area = Length x Width
2. Calculate the total floor area:
total floor area = Ground floor area x Number of
storeys.
3. Calculate the total rebuilding cost:
total rebuilding cost = Total floor area x Rebuilding cost
per square foot.
The cost per square foot will vary depending on where in the
U.K. you live.
Let's take an example of the building insurance rates of an
imaginary insurer called 'Smith & Jones Insurance Services'.
Based on their long experience of insuring homes in the U.K.,
they've set the following rates per square foot for
semi-detached houses:
London/Channel Islands (1946-79) £77
London/Channel Islands (post 1979) £84
South East (1946-79) £67
South East (post 1979) £74
East Anglia (1946-79) £61
East Anglia (post 1979) £65
Rest of UK (1946-79) £59
Rest of UK (post 1979) £62
So, for example;
- You live in Scotland (which counts as the rest of UK)
- The Property is 30 years old (which means a rebuild cost
per square foot of £59)
- Your House is 30ft wide and 40ft long
- It has 2 storeys
1. Ground floor area: 30 x 40 = 1200 square feet
2. Total floor area: 1200 x 2 = 2400 square feet
3. Rebuilding cost: 2400 x 59 = £141,600 (this is the amount
of cover you would need for buildings insurance purposes).
The above figures are only those used by 'Smith & Jones Insurance
Services' but they should provide you with a guide - now get
some building insurance quotes.
It will only take a few minutes of your time today but
could save you thousands of pounds in interest payments and will
eliminate any worries you may have about getting the best mortgage deal
possible.
