Most people pick their buildings insurance figure once, when they buy the house, and never look at it again. Since then, labour and material costs have moved, you may have added an extension or a new kitchen, and the number on your policy schedule may no longer cover a rebuild. This guide explains how the rebuild cost for home insurance in the UK is worked out and how to check yours.
Your rebuild cost is what it would cost to clear the site and rebuild your home from the ground up to the same standard. It is not the price you paid or what the house would sell for, and it can be higher or lower than either. If your sum insured is too low, your insurer may reduce every claim, not just a total loss.
Rebuild cost vs market value
Market value includes the land, the location and demand from buyers. Rebuild cost ignores all of that and asks one question: what would it cost to put the building back?
In expensive areas, a modest terrace can sell for far more than it would cost to rebuild, because most of the value is in the land.
In cheaper areas, or for large, period or unusual homes, the rebuild cost can be higher than the sale price.
That is why insuring for the market value is a common mistake in both directions: you either pay for cover you do not need, or you are underinsured without realising.
What a rebuild cost includes
A realistic rebuild figure covers more than bricks and labour:
Demolition and site clearance, including removing debris safely.
Professional fees, such as architects, structural engineers and surveyors.
Building Regulations compliance. A rebuild has to meet current standards, which can cost more than the original construction.
Outbuildings and boundaries, such as garages, sheds, walls, fences and driveways, if the policy covers them.
Fixtures and fittings, including the kitchen, bathroom, built-in wardrobes and the heating system.
It does not include the land, or your contents, which need a separate contents sum insured.
How underinsurance cuts your claim
Many buildings policies contain an average clause, sometimes called a condition of average. If you insure for less than the true rebuild cost, the insurer can reduce your claim in proportion.
A simple example: if your home would cost £300,000 to rebuild but you are insured for £225,000, you are covered for 75% of the true figure. If you then make a £20,000 claim for storm damage, the insurer could pay 75% of it, £15,000, and you would have to find the rest. Underinsurance affects everyday claims, not just a house that burns down.
Underinsurance is one of the easiest expensive mistakes to avoid in home ownership. Checking your rebuild figure takes less time than comparing car insurance quotes, and it protects the most valuable thing most people own.
How to work out your rebuild cost
1. Check your mortgage valuation or survey
Many mortgage valuations and surveys include a reinstatement or rebuild figure for insurance purposes. It is a useful starting point, but it may be several years out of date.
2. Use a rebuild cost calculator
The Building Cost Information Service (BCIS), part of RICS, publishes a rebuild cost calculator for homeowners. You enter the property type, age, region, number of storeys and floor area, and it produces an estimate.
3. Measure the floor area properly
Calculators rely on the external floor area of each storey. Measure the outside of the house, multiply length by width for each floor, and add the floors together. Include an integral garage if the calculator asks for it, and leave out unheated outbuildings unless asked.
4. Get a professional assessment for unusual homes
Calculators are designed for typical houses. For a listed building, a thatched roof, a large or architect-designed home, timber frame, non-standard construction or a basement, ask a RICS chartered surveyor for a reinstatement cost assessment. The fee is usually modest compared with the risk of getting it wrong.
Common reasons homes end up underinsured
Most underinsurance is not a deliberate choice. It usually creeps in for one of these reasons:
The figure was copied from the purchase price. In some areas that overstates the rebuild cost, but in others it falls well short.
The figure was set years ago. A sum insured chosen when you bought the house can fall behind if building costs have risen since.
Work was never declared. Extensions, loft conversions and garage conversions are easy to forget at renewal, and each one adds to the rebuild cost.
The floor area was guessed. A few square metres missed on each floor adds up across a whole house.
Outbuildings and boundaries were left out. A detached garage, a long garden wall or a large driveway can cost more to replace than people expect.
The construction is unusual. Period features, natural stone, timber frame or a thatched roof cost more to replicate than standard brick and block.
If any of these apply to you, it is worth checking the figure this week rather than at the next renewal.
When to recheck the figure
Rebuild costs change even when your home does not. Recheck your sum insured:
At every renewal. Some insurers index-link the figure automatically, but you still need to check the starting point was right.
After building work. An extension, a loft conversion, a new kitchen or a garage conversion can add a large amount to the rebuild cost.
After a big rise in building costs. If labour or material prices have risen sharply, the old figure may be too low.
Policies with high or unlimited buildings cover
Some policies offer a high fixed limit or no limit on buildings cover, which can remove the risk of underinsurance for typical homes. Read the small print: there may be conditions, exclusions for certain property types, or a limit that is lower than it sounds for a large home.
What to do in the next 30 minutes
Find your buildings insurance schedule and note the sum insured for buildings.
Check whether the policy has an average clause, and whether the figure is index-linked.
Measure the external floor area of each storey and add them together.
Run the figures through a rebuild cost calculator and compare the result with your sum insured.
List any building work done since you last checked, and tell your insurer if the figure needs to change.
Store your policy schedule in Home+, alongside your rebuild calculation and a note of when you last checked it, so you have a reminder at every renewal.
For more on what each type of cover actually pays for, see our guide to buildings and contents insurance.
FAQ
Is rebuild cost the same as the value of my house? No. Market value includes the land and location. Rebuild cost is what it would cost to clear the site and rebuild the house, and it can be higher or lower than the sale price.
Where can I find my rebuild cost? Start with your mortgage valuation or survey, then check it with a rebuild cost calculator. For unusual or listed homes, ask a RICS chartered surveyor for a reinstatement cost assessment.
What happens if I am underinsured? If your policy has an average clause, the insurer can reduce each claim in proportion to the shortfall, so you would pay part of every repair yourself.
Do I need to update my sum insured after an extension? Yes. Building work can add significantly to the rebuild cost, so tell your insurer and update the figure before renewal.
Does a high-limit buildings policy mean I do not need to worry? It reduces the risk for many typical homes, but check the limit is high enough for your property and that there are no conditions that apply to it.
Is flat buildings insurance the same? Not usually. In many leasehold flats, the freeholder or management company insures the building and recovers the cost through the service charge. Ask for a copy of the policy.
