How much would it cost to rebuild your home? It’s a simple enough question asked in almost every Buildings Insurance application form. But answering is fiendishly difficult. It is certainly a lot more than it used to be, but that fact alone won’t help you decide how much insurance you need.
Loss adjusters Woodgate Clark, in their May 2022 Commercial Property Costs Update, reported that the cost of roofing repairs has increased by 91% between January 2021 and 2022. According to Checkatrade, big building jobs – like a ground-up rebuild after a housefire – may suffer the most, because roofing, bricklaying, and general building work are recording some of the biggest price rises. Even plumbers cost on average 67% more.
How much is my insurance rebuilding cost?
Homeowners buying buildings cover must be aware of ‘rebuild costs’. This specific insurance terminology does not refer to the purchase price or the current value of the property, both of which include land values. Rebuild costs are usually lower than the current purchase price, but in some cases the reverse is true. To ensure you aren’t forced to build back worse, it is very important to obtain an accurate and timely cost of rebuilding your home.
What happens if my insurance rebuild cost is too low?
Declaring an adequate rebuild cost is especially important under standard homeowners’ buildings policies. Most ordinary-Joe coverage includes an ‘average clause’ which can have a very costly impact if the insured has set the rebuild cost too low. It seems unfair: claims will be reduced by the percentage of the underinsurance. For example, if you bought £100,000 to cover rebuilding costs, but the final price is £150,000, you would be under-insured by 33%. Your total payment from the insurer would be £66,666, not £100,000.
Have home rebuilding costs gone up?
Inflation is another factor – especially today. Your estimated rebuild costs have to keep pace. As the statistics above show, rebuilding costs have increased hugely, especially for higher value properties. Driven by the pandemic, the fuel crisis, Brexit, and snarl-ups in the global transportation and logistics sector, an old rebuilding cost of £2,000 per square metre may now be up to £5,000. With those numbers, it’s easy to find your claim is several hundred thousand pounds short.
What is guaranteed reinstatement cover?
To avoid this potentially crushing cost, Miller Private Clients’ buildings insurance policies can offer guaranteed reinstatement cover. It may be that a surveyor appointed by the policyholder or the insurer has calculated a rebuild cost of £500,000, but if the rebuild costs £800,000 – say after a devastating fire or a flood that destroys the building completely – the insurer will cover the difference. That protection is offered for every high-value policy we sell.
You probably won’t be adequately insured under an average-Joe insurance policy. Fortunately, though, the peace of mind that comes with knowing you have it properly covered is only a few clicks away. Cover from Miller brings the comfort of entrusting your home will be built back better, with coverage from a reputable insurance company. It’s available 24/7, so visit us now at Miller Private Clients for an instant quote.