Rebuild Cost Calculator
Estimate the rebuild cost a buildings insurance policy should cover, including demolition and fees, and compare it against the market value.
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Buildings insurance covers the cost of rebuilding the property, not its market value. The two are different numbers and either can be higher: market value includes the land, which cannot burn down, while rebuild cost includes demolition, site clearance and professional fees that a sale price never reflects.
Insuring at market value is a common and expensive mistake in both directions — over-paying premiums where land is most of the value, and under-insuring where construction costs have risen faster than prices.
The calculation
Rebuild cost = (floor area × rebuild rate + demolition and clearance) × (1 + professional fees). The fees cover architect, engineer and building control on a reconstruction, which are real costs after a total loss.
Worked example
An 1,800 square foot house at a 180 rebuild rate is 324,000 of construction. Adding 15,000 for demolition and clearance gives 339,000, and 12% professional fees brings the rebuild cost to about 379,700 — roughly 76% of a 500,000 market value. Insuring for 500,000 here would mean paying premiums on 120,000 of cover that could never be claimed.
Under-insurance is penalised proportionally
Most policies apply average: insure for half what the rebuild costs and a partial claim may be settled at half its value, not just capped at the sum insured. Review the figure every few years, since construction costs move independently of house prices.
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Create your free property pageFrequently asked questions
Why is rebuild cost lower than market value here?
Because market value includes the land, and land does not need rebuilding. Where land is expensive relative to the building, rebuild cost is well below market value. In areas with cheap land and costly construction, the reverse is true.
What happens if I am under-insured?
Many policies apply the principle of average, reducing every claim in proportion to the shortfall. Insuring for 70% of the rebuild cost can mean a partial claim is settled at 70% of its value, which is why the figure matters even for small claims.
Do I need a professional assessment?
For a standard modern house, a published rebuild cost guide is usually sufficient. Listed, historic, non-standard construction or very large properties should be assessed by a surveyor, since those rebuild costs are far higher than any general rate.
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