Home Insurance Rebuilding Estimates

[porkchop]

When entering the RE-Build cost on my Home Insurance form what is the formula. I think this is where the Insurance companies rip us off. It would seem to me that your house would have to burn to the ground to justify some of the figures. We do not use coal or turf any more and no one smokes so the danger of our house going up in flames is remote. If anything drastic happens at least the four wall would be standing so the figures the the Insurance companies come up with for rebuilding would appear to be excessive. At least the site would be already there and the site is probably worth more than the house! Any views would be welcome.

[heathfield]

'The four walls would be standing' Yes, but they may not be in a safe condition. The insurers have to take into account that the whole dwelling might have to be demolished, and the land cleared for re-building to take place. That ain't cheap these days.

[The Builder]

I completely agree with Heathy. It's a "worst case scenario" that they have to allow for, Porkers :o)

[woofgang]

How do you know the four walls would be standing?

[buildersmate]

This has been a bone of contention with me for a while.
The market value of a property has no bearing on its cost or indeed its rebuild cost. It has everything to do with what someone will pay for it. Sure, it costs a bit more in the south and east to build, but not by the factors that impact valuations. The difference is then made up by the value the land, not destroyed in any fire, of course.
Many insurers now quote rebuilding costs in quotes as up to £500k, and this solves the issue. The next band is then up to £1m. The first of these bands should cover most properties of up to 350 square metres gross internal area. This is what I force my insurer to use. The market value of my property is around £850k.

[VHG]

If there was a gas explosion on your house or a nearby house you may not have 4 walls still standing, like this example

http://www.webbaviation.co.uk/oldham/GasExplosion.jpg

[Peter Pedant]

Jesus BM where are you

Most of the houses are insured here for rebuild at £100k and retail at 70.

I always thought a fomula of price of house minus land price was OK

[soapnumpty]

You have to assume the house is completely destroyed as already said, and factor fees in to the rebuilding cost such as architects and planning applications. It's usually done on so much per sq ft depending on where you are in the country. Your insurers may be able to give you a guide of how to work it out. You don't want to be underinsured (give them a figure that is too low) as this will affect any claim you make, no matter how small the claim.

[ummmm]

According to a loss adjuster I was talking to most people are underinsured.

[Canary42]

Of course the insurance companies rip you off - how naive to ever think otherwise.

[ummmm]

I don't think they do.

[gingejbee]

Why don't you get cover from somebody who doesn't require this silly estimate in the first place. My John Lewis buildings insurance says "unlimited "...and, before anybody comments about the price, it was the second lowest quote...for much better cover. And, the contents cover is very inexpensive, too.

[buildersmate]

PP. One needs to assume a rebuild cost of £1500 per sqm.