Make sure you have the correct ‘buildings sum insured’ on your home insurance policy

12 September 2011

It’s easy to confuse the replacement cost of your property with the market value. The rebuilding cost is not the same as how much you could sell your home for as this price takes into consideration the land and location.

Your buildings insurance policy should cover the full cost of rebuilding your home if it were totally destroyed. This includes any outbuildings plus any additional charges which could be incurred in rebuilding, such as demolition costs, architects and surveyors fees and complying with the requirements of local authorities. The value of the land under your home isn't a factor in replacement.

But what is classed as ‘contents’ and what as 'buildings’?

Imagine turning your house upside down. Now shake it. Everything that falls out is contents and everything that doesn’t is buildings!

Buildings is the home and its permanent fixtures and fittings, which also includes swimming pools, paths, drives, terraces, walls, hedges, gates and fences all contained with the boundaries of the land.

Contents are your household goods or personal property contained in the home or within the boundaries of your property; curtains, clothing and furniture for example.

Why is an accurate rebuild cost important?

Because you need to make sure that, in the unlikely event your home is totally destroyed, enough money will be paid by the insurance company to cover all the rebuild costs, without leaving a shortfall for you to pay. This is also known as ‘underinsurance’.

In the event that you are underinsured at the time of a claim, the insurer will calculate the percentage that you have underinsured by. It would then be your responsibility to pay for the underinsured amount. For example if you were to insure your buildings for £100,000 but at the time of your loss it was found the rebuild cost of your buildings was £200,000, the insurer will only be liable to pay up to £50,000. This is why it is important your rebuilding cost is accurate.

How can Towergate Insurance help?

When getting a quotation and buying insurance with Towergate, we can use the calculator from the Building Cost Information Service (BCIS), which is part of the Royal Institute of Chartered Surveyors, which provides an estimated rebuild value. The calculator gives a general indication of rebuilding costs for many common properties within the UK to help you get started in deciding the rebuild cost you need for your policy.

Certain types of property will not be covered by the BCIS calculator, such as properties built before 1720, listed buildings, flats, properties with special or unusual features and properties built of a non standard construction such as Thatched. For such properties, you may need to hire a surveyor to advise you of the accurate rebuilding cost.

Our UK-based advisors are available Monday – Friday, 9am until 6:30pm. Call 0844 346 3253 today for a quotation. Neighbourhood Watch members can get a 15% discount* on our home insurance policies.

*Terms and Conditions

The Discount of 15% on home insurance policies is only available to Neighbourhood Watch members, subject to normal underwriting criteria, with three years no claims. This offer is available until 31st December 2011.

Additionally, a 15% no claims discount applies to those customers able to provide evidence of the last 3 years or more as being claim free under their own insurance policy. 5% no claims discount is available for up to 3 years no claims.