Published On: Tue, Jun 25th, 2019

Home insurance: House value vs rebuild cost – claim may be affected by giving wrong number | Personal Finance | Finance

When applying for buildings insurance, potential policyholders are asked a number of questions about their property. This includes what the cost of rebuilding the accommodation would be. Some people may go to enter the value of the house. However, a number of insurance experts have pointed out that it may be that the rebuild cost is actually less than the price that their property is worth.

The price comparison website Compare The Market instructs its users to exclude the value of the land a property stands on.

“This is why the rebuild cost is typically less than the market value,” it adds.

What’s more, it seems that those seeking a home insurance quote should make sure they enter the rebuild cost as accurately as possible.

According to, this is not only to ensure policyholders don’t pay over the odds, but also to make sure that the claim can be fully paid.

The website states: “Take care to estimate the rebuild cost correctly so that you are adequately covered and you do not pay too much on your premium.

“If you made a claim and your rebuild cost was too low, your provider may not settle the claim in full.” advise that current home insurance policy documents may indicate what the rebuild cost is.

Alternatively, a surveyor’s report or mortgage valuation report from the last two years may also highlight this figure.

Last year, Direct Line highlighted how the cost of rebuilding a house accounts for three-fifths (59 per cent) of its market value.

According to data from the Royal Institution of Chartered Surveyors, the average cost of rebuilding a property in the UK stands at an estimated £114,000.

On average, the remaining 41 per cent of the property’s value comes from factors such as location – including local amenities, schools, and transport links.

A home insurance expert has assured a warning about getting the best deal.

It came as the Government announced plans to hand over new powers to the Competition and Markets Authority (CMA), giving the watchdog the ability to decide itself whether consumer law has been broken.

Under the new plans, the CMA would be able to impose fines on firms for poor business behaviour.

Prime Minister Theresa May said: “For far too long, many big companies have been getting away with harmful trading practices which lead to poor services and confusion among customers who have parted with their hard-earned cash.

“The system as it stands not only lets consumers down but it also lets down the vast majority of businesses who play by the rules.

“It is high time this came to an end and today we are confirming our intention to give much stronger powers to the CMA, to strengthen the sanctions available and to give customers the protection they deserve against firms who want to rip them off.”

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