Buildings insurance - How much cover?

You need to insure your property for the amount it would cost to rebuild it, which includes not just labour and materials but also the cost of removing rubble, fees for professionals such as architects and surveyors, and other rebuilding costs. The rebuilding cost can be quite different from the likely resale value of your home, or its council tax valuation, which could be much more or much less. This is not as bizarre as it sounds if you bear in mind that the market value of your home, unlike the rebuilding cost, takes into account many factors unrelated to the cost of the building. For example, two identical houses at opposite ends of the road may have very different market values because of their immediate surroundings.
If you are buying buildings insurance because you are getting a mortgage, your mortgage valuation should say how much the property should be insured for. If you are not getting a mortgage, you will either have to work out the rebuilding cost yourself or you can get a professional insurance valuation done by a qualified surveyor. (The Royal Institution of Chartered Surveyors can provide a list of its members). You should always seek a professional surveyor’s advice if you live in one of the following types of property:
· A house built of stone or other materials which are not brick
· A house with basements and cellars more than three storeys
· A flat (because types of construction vary, as do responsibilities for the insurance of shared areas)
· A house with special design features
· A particularly large house
· A house which is of historic interest or which is a listed building, since it will almost certainly have to be rebuilt to its original design using appropriately authentic materials
· A house containing hazardous materials – asbestos, for example – likely to require special precaution or treatment following damage or demolition
· A house or flat in Northern Ireland or the Channel Islands

If none of the above applies to you and you do not want to pay for professional help, you can get advice on how to calculate the rebuilding cost of your home from the Association of British Insurers: ask for the information sheet called ‘Buildings insurance for homeowners’. This tells you how to measure the floor area of your home, how to do the calculations using building cost tables produced by the Royal Institution of Chartered Surveyors and which extras – such as the cost of double glazing or a burglar alarm – to add in.
On the face of it, there are no complicated sums to do if you choose a bedroom-rated policy because all you need to do is count the number of bedrooms. However, if you do not calculate the rebuilding cost, you will not be able to work out if a sum-insured policy would be better value and you will not be able to check if the cover offered by the bedroom rated policy is sufficient. You may also find that a bedroom-rated policy is not on offer if your house has more than a certain number of bedrooms.