Table of Contents
Introduction to Freehold Insurance
Freehold insurance is crucial for protecting your freehold property against total loss or damage, and understanding your rebuild cost is essential for adequate coverage.
This will help your insurer price a policy for you and to do that they will need you to provide building insurance valuations or rebuild value when you ask for a quote.
The rebuild value helps homeowners determine the accurate rebuild value of their property, ensuring they are not underinsured or overinsured. There are often tools online, such as the ABI rebuild calculator that you can use HERE.
Buildings insurance valuations are a critical component of the insurance industry, and property owners must provide an accurate rebuild value to ensure proper insurance coverage.
The calculator takes into account various factors, including labour, materials, and professional fees, to provide a comprehensive rebuild cost estimate.
For any questions, contact Emerald Life on 0330 113 7109 and we will be happy to assist!
Understanding Rebuild Cost
Rebuild cost refers to the total cost of completely rebuilding a property (your home’s rebuild cost, or building in the case of a freehold), including labour, materials, and professional costs, in the event of total loss or damage. For residential properties, you may get this from a mortgage document or similar where your lender will require insurance from the property owner or property owners.
An accurate rebuild cost is essential for ensuring sufficient insurance coverage, and homeowners should consult a chartered surveyor for properties with special architectural features or listed status.
The rebuild cost may be higher than the market value of the property, especially for properties with non-standard materials or unique features so the sum insured may be higher.
Homeowners should review and update their rebuild cost regularly to ensure their insurance coverage remains adequate.
Calculating Rebuilding Cost
Calculating rebuilding cost involves determining the total cost of completely rebuilding a property, including labour, materials, and professional services. In short you need to cover everything that you might need to pay for your buildings rebuild cost – and then insure that amount when you calculate it with your insurer.
Homeowners can use a rebuild value calculator to estimate the rebuild cost of their property, taking into account various factors such as location, size, and materials. Then should you need to make a claim you have all the details that you need and a range of valuation that will ensure that you can get the correct cover.
Remember that it is the responsibility of the freeholders (usually the owners of the apartments in a block) to arrive at a value (including any garage or outbuilding on site) that will provide the basis for the calculations of the insurance premiums.
The calculator provides a comprehensive rebuild cost estimate, including the cost of site clearance, professional fees, and materials.
Homeowners should consult a chartered surveyor for properties with special architectural features or listed status to ensure an accurate rebuild cost estimate. In these cases, it can be a little more complicated and a specialist may need to visit to look at the land and buildings, but their assessment of the structure and any repair costs – and their advice – will be invaluable when looking at the figure that you need to insure as part of that assessment.
Market Value Considerations
Market value refers to the price a property would sell for on the open market, and it may be different from the rebuild cost. On average the rebuild figure is lower but see above – that may not always be the case.
Homeowners should understand that the rebuild figure may be higher than the market value, especially for properties with non-standard materials or unique features.
The market value of a property is influenced by various factors, including location, size, and condition, and it may not reflect the actual cost of rebuilding the property.
Homeowners should ensure that their insurance cover is based on the rebuild cost, rather than the market value, to avoid being underinsured when taking out that all important cover.
Managing Buildings Insurance
Managing buildings insurance involves ensuring that the property is adequately covered against total loss or damage and this will be reflected in your premiums or price charged by an insurer when they insure your freehold.
Homeowners should review and update their rebuild cost regularly to ensure their insurance coverage remains adequate.
The sum insured should reflect the total rebuild cost of the property, including labour, materials, and professional fees.
Homeowners should consult a chartered surveyor or insurance expert to ensure that their buildings insurance is adequate and up-to-date.
Frequently Asked Questions on Home Insurance and Rebuild Value
These are the questions that you may need to ask yourself – and Emerald can provide the answers…
What is rebuild cost, and why is it important for home insurance?
How do I calculate the rebuild cost of my property, and what factors should I consider?
What is the difference between rebuild cost and market value, and why is it important to understand the difference?
How often should I review and update my rebuild cost, and what are the consequences of being underinsured or overinsured?
Can I use a rebuild value calculator to estimate the rebuild cost of my property, and what are the benefits of doing so?
Conclusion
For certain properties, you will be asked for a rebuild value. For residential properties such as freeholds this will always be the case in the UK. A good insurer will be able to point you in the right direction when making that assessment to ensure that you get the right cover.
Here at Emerald, we are always happy to help with this assessment. Call us today on 0330 113 7109 or email us at customerservice@emeraldlife.co.uk to see how we can help!
