Hello, I'm just about to pay the insurance renewal on me old mum's house and the sum insured for the building has caught my eye, it's way below the market value of the house, possibly only half what the house might sell for at the mo.
I'm aware that house prices are silly right now but am I right in thinking this is rather low? Do other users have a buildings insurance about right for the market value of their house, or is this something I should change?
cheers,
Andy.
In message , andrewpreece writes
Why?, the cost of rebuilding a house is not really related in anyway to hoe much it might sell for at the moment.
My rebuilding insurance value (IIRC somewhere around GBP 100000) is way below current market price (probably about GBP 200000) in fact it is probably getting on for half the market price.
When we bought the house the rebuilding cost was more than the price of the house
You insure it for the rebuild cost and usually it bears no relation to what the house is worth, houses in our street go for over 220k, but the rebuild cost was calculated by a surveyor at only 80K (although we insure it for a bit more) , I think they use the guidance from the assocation of british insurers:
Surely it should be insured for the rebuild cost, not its value. If it burns down all you have to do is clear the site and rebuild (all?), you don't have to buy the site.
Rebuilding cost is basically building size (in sq ft) times a cost per sq ft which is a function of building type and (loosely) location. It is nothing to do with house price. In the 11 years in my current house, the insurance valuation has been broadly the same as market value, then somewhat above it, and is now a long way behind it. At all times, it has vastly exceeded what I imagine a builder would spend on levelling the site and erecting the most profitable house for re-sale but unfortunately if you want buildings insurance you are not permitted to follow that line of thinking.
When I bought my last house, market value was 225,000 and rebuilding valuation for insurance was 85,000, which is only 37% of market value. That is a 3 bed mid-terrace, nothing fancy.
Christian.
The insurance should cover the cost of rebuilding the house. That can be much lower than the value of the house+land.
Robert
HomeOwnersHub website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.