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Calculating the cost of rebuilding your house

If the worst came to the worst and your house suffered such cataclysmic damage that it needed to be completely rebuilt it would be vital for you to have insured it for a sufficiently large sum to cover not only the cost of rebuilding the house but also a sufficient sum to pay for demolition of the damaged structure, checking and re-fixing of services such as water gas and electricity, architects and surveyors fees, and any fees payable to the local authority. Many people tend to look at the market value of their properties and put that down as the likely rebuilding cost but this is rarely the case. The market value of your house includes the land that it sits on, and depending upon the area that you live in this could be a relatively small, medium or extremely high proportion of the potential selling price. Conversely, many older houses have very ornate characteristics which make them far more expensive to rebuild than standard modern properties. If these houses are in relatively inexpensive locations the rebuilding cost could far exceed their open market valuations. There is therefore a danger that (a) you insure your home for a higher sum than it would cost to rebuild it, and waste a lot of your hard earned money or (b) far worse, you find yourself under insured and unable to afford to repair or replace a house that you may still have a considerable mortgage on.

The insurance industry is aware of this problem and it is in their own interests that their clients insure their homes for the correct amount and so the Association of British Insurers in cooperation with the Royal Institute of Chartered Surveyors have produced a tool to help their clients to work out a realistic building cost based on the property's postcode, floor area, number of storeys, number of bathrooms and bedrooms, type of construction including walls and roofs etc etc. It is designed to give a range of costs for the rebuilding of fairly standard houses and this would be expected to cover around 90% of the privately owned houses in Britain.

Please note that this tool is okay for houses; with flats the situation becomes far more complex. If you own a flat in a block, and that block burns to the ground or is otherwise damaged beyond repair you cannot simply rebuild your own flat, it would be necessary for the entire block to be rebuilt at the same time. All kinds of disputes can break out, too, amongst the flat owners over which of them are responsible for replacement of the roof, foundations or communal areas. Ideally the entire block should be covered on one policy and many developments are indeed run by management committees, often comprised of some of the owners of the individual units, who arrange not only insurance but all other communal matters such as exterior decoration and garden maintenance on behalf of the whole community.

If your house is of unusual design, is very old or is a listed building it would probably fall outside the scope of a fairly simple calculator like this and you would probably need to get professional advice from a local qualified chartered surveyor.

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