Are you paying too much for buildings cover?

Are you paying too much for buildings cover? The answer to this question could be "yes", if you are one of the 30% of us who think that rebuild cost is the same as, or more than, the purchase cost of your property.

According to data collected by Confused.com over a six month period, 10% of us think that rebuild cost and purchase price are the same, whilst 20% think that rebuild cost is more than purchase price. In actual fact, a semi-detached house of 742 square feet with a garage, bought for £180,000, would only cost £85,700 to rebuild in the south east of England and £6,000 less in the north east.

If you are buying a property with a mortgage, then your lender will insist on this cover and will specify the rebuild cost. If you are buying the property outright, it would be pretty foolish not to cover the cost of rebuilding your home, should disaster strike in the form, for example, of fire, earthquake, subsidence, falling trees, flood, explosions or even falling aircraft, and you may wish to employ a chartered surveyor to calculate the rebuild cost. To find a reputable surveyor in your area have a look at the RICS website.

Alternatively, a useful way of calculating the appropriate sum to be insured can be found on the Association of British Insurers’ website. The rebuild costs will depend on the floor area of your home, whether it is detached, semi-detached, terraced or a bungalow, the age of the property, and the area in which you live.

Having established the rebuild cost, many insurance companies will index-link the figure so that you do not have to keep recalculating it.