Why an Article on Rebuild Costs
Why are we taking time to write about thatch and rebuild costs, you may ask? Alternatively, you might be one of those who understands very well why we have decided to look at this situation. We aim to assist our website visitors as well as our social media friends and followers with helpful and useful information. Rebuild costs is a topic on which we have been regularly contacted, so we felt some more information would be in order.
We recently mentioned, on our social media, the importance of checking that your thatcher has Public Liability and Employers Liability insurance (as necessary). Obtaining thatched property insurance is also, apparently, becoming an issue for some. Rebuild costs are part of the whole package of information insurers require.
Why Rebuild Costs are Important
It is therefore necessary that the rebuild cost is correct when it comes to sorting out your thatch property insurance as, should there be a problem, it will be paramount. Sadly, it appears that insurance cover is even harder to confirm, if your rebuild cost is over £2m! Perhaps that’s another article!
Please remember that rebuild costs are not the value of the house but the cost to rebuild, like for like should there be a claim. It is not the land value but the materials, labour etc. which form the cost of the rebuild. One thing is for certain, if you make a claim you don’t want to be underinsured.
We decided to ask our specialist Thatch Insurers for a few words on this topic and here’s what they had to say. Responses in order received so no favouritism!
Insurers Responses
NFU Mutual Wessex
“If you underestimate the rebuild cost of your property you could end up paying thousands of pounds to make up the shortfall should disaster strike.
How can you correctly estimate the costs for rebuilding your home?
Consider the following:
- The insurance value is based on a mortgage valuation or a % of market value. These are not indications of what it will cost to reinstate the property and will therefore be an inaccurate estimate for rebuilding costs.
- Listed buildings status or a conservation area location may require additional permissions and specialist craftsmen/materials.
- The property’s construction materials e.g. stone or non-standard materials (‘green or high tech’) can be unique and difficult to obtain.
- Extensive outbuildings, garages, sheds, walls, courtyards and driveways need to be included in the valuation.
- The age of the property.
- The fixtures and fittings within the property and any recent extensions, alterations or refurbishments.
- The location and access to the building and site.
If you’re in any doubt as to the accurate rebuild value of your property, please consult a surveyor.”
The Home Insurer
“The basis of your thatch property insurance is the rebuild value; this is the cost to rebuild the property in a total loss situation (raised to the ground).
If you are undervalued, then any claim could be declined or proportionality applied. Proportionality is when you have only insured for 50% of the actual rebuild value, so the insurer will only pay out 50% of the total claim. In this example, we’d expect insurers to decline the claim as the original rebuild value was so far out that it may be fraudulent. Your best defence is to have the right rebuild value.
The easiest way to get an accurate rebuild value is if you have a mortgage as they normally give a reinstatement minimum value based on a survey – to protect the lender’s financial interest. Without a mortgage, you will need your own survey as most of the calculators online do not cope with thatch properties accurately.
Anything else is guesswork and putting your home at risk if you need to make any claim. Sounds dramatic – but that is the truth.”
County Insurance
“Under-insurance and rising rebuilding costs are major issues for insurers and brokers alike. One of our partner valuers has completed research to show, on average, home buildings are insured for approximately 68% of their true total rebuild. This indicates a high awareness gap between assumed insurance values and factual rebuild costs.
The best thing your readers can do is to seek a professional valuation on a low-cost, desktop-based service from RICS registered surveyors. This report would give a more accurate rebuild cost for their property which prevents under-insurance and in turn avoids reduced claims payments.
There can be under-insurance on home contents too. It’s been calculated by one insurance provider that over £226 billion of home and flat contents are either under-insured or not even insured at all.
Within the current hard market of insurance there is limited supply of policies for high value homes but it’s not impossible to find. Speak to your broker and never under-declare what you have. Often you can ameliorate premium increases by increased excesses, enabling you to maintain correct insurance without compromise.”
Conclusion
Insurance cover must be right in order to protect you in the best way. The importance of getting your rebuild costs right cannot be emphasised too much. As previously mentioned, being under insured can be a real problem if you have to make a claim.
Many thatched properties are one offs, unique and are often listed too. Getting appropriate insurance cover is therefore imperative. Often it is a case of getting a surveyor or other specialist involved to set this rebuild amount in the first place. If you get it wrong and do have a problem, it can be a very costly mistake.
We hope that this article has been helpful and, without wanting to worry our readers, we need to clarify this subject of rebuild costs. If you have any interesting points on this topic, please do not hesitate to get in touch.