Rebuilding Costs
When reviewing your insurance requirements it is essential to ensure that the rebuilding/reinstatement cost is accurate.
The rebuilding cost is commonly misunderstood for the properties sale value minus the land, however this may not always be true.
Your rebuilding cost will be calculated using a number of factors such as
-Year of build
-Number of bedrooms
- Materials
-Size
-Location
It is important to note that if your property is listed it is likely to cost more to rebuild. The rebuilding cost should accurately represent the cost of materials, labour, professional fees and the clearance of the site.
What happens if you are underinsured in the event of a claim?
Another common misunderstanding is that for example you insure for £ 300,000, the insurer would pay you £ 300,000 in the event of a claim despite being underinsured. This usually is not the case as most insurers apply what is called an Average Clause.
Applying average means that the percentage you are underinsured for will be deducted from the overall claim.
i.e. under insured by 10% will result in a 10% deduction from the claim settlement amount.
This applies in cases for both total losses and partial losses.
Please note that your insurance broker is not qualified to calculate your rebuilding cost and despite insurers index linking your sums each year,
they too are not responsible for calculating your rebuilding costs and are only increasing the rebuilding sum provided by you with inflation.
How do you calculate your sums insured?
You may wish to appoint a surveyor or alternatively you can visit:
or
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