House insurance & re-build value

[G***@googlemail.com]

I moved into my house some 2 years ago. The inspection reported quoted
a re-build value which I used for the house insurance for the past 2
years. The house insurance is now due for renewal again. I feel I
ought to increase the re-build amount to ensure adequate cover but am
unsure of the percentage to increase it by. It's said English house
prices are dropping, but would this also apply to the costs of
rebuilding, ie materials and labour are unlikely to get cheaper. Any
advice appreciated.

[Roger Mills]

In an earlier contribution to this discussion,

Post by G***@googlemail.com
I moved into my house some 2 years ago. The inspection reported quoted
a re-build value which I used for the house insurance for the past 2
years. The house insurance is now due for renewal again. I feel I
ought to increase the re-build amount to ensure adequate cover but am
unsure of the percentage to increase it by. It's said English house
prices are dropping, but would this also apply to the costs of
rebuilding, ie materials and labour are unlikely to get cheaper. Any
advice appreciated.

Have a look at http://abi.bcis.co.uk/ which provides a rebuilding cost
calculator.

Alternatively, ask your insurance company to increase the original value by
the appropriate indexes - assuming it was right to start with.

As you rightly assume, rebuilding cost and market value are not directly
related - and are often widely different.

[g***@woodall.me.uk]

Post by G***@googlemail.com
I moved into my house some 2 years ago. The inspection reported quoted
a re-build value which I used for the house insurance for the past 2
years. The house insurance is now due for renewal again. I feel I
ought to increase the re-build amount to ensure adequate cover but am
unsure of the percentage to increase it by. It's said English house
prices are dropping, but would this also apply to the costs of
rebuilding, ie materials and labour are unlikely to get cheaper. Any
advice appreciated.

Usually you can ask your insurance company to automatically increase
the rebuild costs by the appropriate amount each year.

A few years ago when I had my house revalued my quoted rebuild cost
was about 10% higher than the indexed value from the original value
from the survey.

When I called up to have the value updated they said that because my
insurance had been indexed from the original value they would have
honoured the rebuild costs (provided the original value was reasonable
which I assume it was) and, IIRC, increasing the insured amount didn't
affect the premium that year anyway (and there wasn't a major change
in premium in subsequent years either)

I suspect that unless a house is very unusual, most insurance
companies will honour any claim if the valuation is reasonable and
taken from the appropriate tables.

Tim.

[Jonathan Bryce]

Post by G***@googlemail.com
I moved into my house some 2 years ago. The inspection reported quoted
a re-build value which I used for the house insurance for the past 2
years. The house insurance is now due for renewal again. I feel I
ought to increase the re-build amount to ensure adequate cover but am
unsure of the percentage to increase it by. It's said English house
prices are dropping, but would this also apply to the costs of
rebuilding, ie materials and labour are unlikely to get cheaper. Any
advice appreciated.

No. Most of the fall in house prices relates to falls in the price of land,
which your insurance doesn't cover. Materials have gone up in price a
lot - by more than inflation generally. Labour costs will have increased
in line with earnings inflation. There are standard indices you can use to
work out rebuilding costs. Your insurance company should be able to
assist.

[Alan]

Post by Jonathan Bryce

Post by G***@googlemail.com
I moved into my house some 2 years ago. The inspection reported quoted
a re-build value which I used for the house insurance for the past 2
years. The house insurance is now due for renewal again. I feel I
ought to increase the re-build amount to ensure adequate cover but am
unsure of the percentage to increase it by. It's said English house
prices are dropping, but would this also apply to the costs of
rebuilding, ie materials and labour are unlikely to get cheaper. Any
advice appreciated.

No. Most of the fall in house prices relates to falls in the price of land,
which your insurance doesn't cover. Materials have gone up in price a
lot - by more than inflation generally. Labour costs will have increased
in line with earnings inflation. There are standard indices you can use to
work out rebuilding costs. Your insurance company should be able to
assist.

http://calculator.bcis.co.uk/

However, in the past few years I've found that some insurance companies
do much better deals on a a 'one policy fits all' rebuild cost of up to
500K or £1M and £50K contents rather than getting quotes for a realistic
(lower) rebuild cost.

[t***@isbd.co.uk]

Post by Alan

Post by Jonathan Bryce

Post by G***@googlemail.com
I moved into my house some 2 years ago. The inspection reported quoted
a re-build value which I used for the house insurance for the past 2
years. The house insurance is now due for renewal again. I feel I
ought to increase the re-build amount to ensure adequate cover but am
unsure of the percentage to increase it by. It's said English house
prices are dropping, but would this also apply to the costs of
rebuilding, ie materials and labour are unlikely to get cheaper. Any
advice appreciated.

No. Most of the fall in house prices relates to falls in the price of land,
which your insurance doesn't cover. Materials have gone up in price a
lot - by more than inflation generally. Labour costs will have increased
in line with earnings inflation. There are standard indices you can use to
work out rebuilding costs. Your insurance company should be able to
assist.

http://calculator.bcis.co.uk/
However, in the past few years I've found that some insurance companies
do much better deals on a a 'one policy fits all' rebuild cost of up to
500K or £1M and £50K contents rather than getting quotes for a realistic
(lower) rebuild cost.

Yes, that's my experience too. It knocked my premium down from the
three hundreds to the two hundreds.