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Why accurate rebuild costs are important for insurance

To help answer any questions you may have about property rebuild costs our business partners CLEAR Insurance Management have put together this guide to make sure you find the right cover for you. To find out more and to request a Rebuild Cost Assessment please click here.

The rebuild cost of a building is also often referred to as the “value at risk”. As the owner of a property, you are responsible for making sure that your building(s) cover is valued at the correct amount so you are not at a financial risk.

According to recent research[1], 80% of UK properties are currently underinsured – with the average underinsured property only insured for 68% of its true rebuild value. With rebuilding costs continuing to increase, this insurance gap is expected to get wider – leaving a lot of property owners in financial trouble should the worst happen.

The same research also found that 14% of properties are over insured, meaning that policyholders are paying too much for insurance cover they don’t actually need.


How to make sure your property is insured for the right rebuild cost

If you are over-insured you are probably paying too much for your buildings insurance, and if you are under-insured, you face a significantly reduced pay out in the event of a claim. Therefore, it is important to make sure you have an accurate rebuild cost assessment when you take out a policy.

The first step is to request a Rebuild Cost Assessment – you will receive a comprehensive Rebuild Cost Assessment (RCA) report guiding you on how much you should insure your buildings for.


What factors contribute to the rebuild cost of my property?

The rebuild cost of a property is the amount of money that would be needed to completely reconstruct it from the foundations up. The cost can therefore be broken down into two main factors:

  1. The cost of materials
  2. The associated cost of labour

Other factors that may influence the rebuild cost of your property can include the type of property, the location and the type of construction materials that may be required (e.g. a thatched roof).

The total declared value is calculated through the bricks and mortar of your property. It will cover everything that is fixed, including fitted kitchens and bathrooms from the beginning of the policy date. It will also include the clearing of the land and any professional fees if destruction of the building is required for rebuild.


Why is the rebuild cost different from the market value of the property?

The main difference between the rebuild cost and the market value of the property is that the rebuild cost is not influenced as much by external market forces. Factors such as the house market activity in your area, school catchment areas don’t impact the rebuild cost but can influence the market value of the property.


Act now to address underinsurance on your property

Due to the rising costs of building materials and labour, even buildings that were accurately valued when a policy was taken out are at risk of becoming underinsured now.

Therefore, owners of both residential and commercial properties are encouraged to review their buildings insurance policies and making sure the rebuild costs and sums insured are accurate.

For more information on how we can help and to request a comprehensive Rebuild Cost Assessment (RCA) report please click here.


Get a FREE landlord insurance quote

If your landlord insurance is up for renewal soon you can get a free online quote from CLEAR Insurance Management today: Get a Quote

If you would like to find out more about the cover provided by CLEAR Insurance Management you can contact them today to get a free consultation. CLEAR Insurance Management have extensive expertise in the property sector and access to a wide range of insurers to help NetRent landlords.

Click here to get a free consultation now

Cover features include:

  • Wide cover including subsidence and contents.
  • Low excess levels starting at £100 (£1,000 for subsidence).
  • Inflation proofing via index linking or “Day one” increases.
  • Loss of rental income at 30% based on 36 month indemnity period. (Other limits are available)
  • Property owners’ liability cover at £5M (Option for increase to £10M is available).
  • Theft and malicious damage by tenants
  • Accidental Damage cover
  • Including cover for illegal cultivation of drugs (Dependent on Insurer)
  • Flexible approach to temporary un-occupancy between 60 and 90 days.
  • All tenant and property types accepted.
  • Residential, commercial or mixed property.
  • Occupied and unoccupied property.
  • Single properties or portfolios, including mixed portfolios.
  • Contents only option.


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