How to Calculate a Building's Sum Insured for a Holiday Let

Getting an accurate quote for your 'buildings sum insured' is an essential part of getting the right buildings insurance cover for your holiday let, and getting it wrong can lead to serious financial implications. More than two thirds of household properties are underinsured, sometimes up to as much as 70% less than the actual re-build cost.

To make sure that you don't leave yourself under or over insured, take time to calculate an accurate figure for re-building your property, so that your insurance provider can give you an accurate quote.

To save you time and possibly some money, here is everything you need to know about calculating the re-build cost of your holiday let.

What is Buildings Sum Insured for Buildings Insurance?

In a nutshell, the re-building cost of a property is known and the 'buildings sum insured', and it's the total amount that you will be insured up to in order to completely re-build your property.

Having an accurate figure to give to your insurance provider is essential. If you fail to submit the correct sum, you could end up over or under insured, which leaves you in a great deal of financial risk should anything happen to your property.

It's very important that you don't confuse this cost with your property's current or predicted market value, or the price that you paid for the property.

The figure for re-building your property is different, and it's your responsibility to make sure that it is accurate. Your premium will be determined by the provider using the figure that you have quoted.

How Can I Calculate the re-build cost for my holiday let?

There are 2 main ways in which you can get your re-build quote: by using an online calculator or using a chartered surveyor. Lets take a look at these in more detail:

Should I use an online calculator to calculate my buildings sum insured?

Using an online calculator is a quick and efficient way to get your re-building cost, but it's not appropriate for all types of properties.

If your property is a standard construction house or flat, then an online calculator could be a good option for you. You can use the online calculator from The Building Costs Information Service to get an online quote for the re-build cost of your property.

You'll need to register your details through the website before you begin your quote. The service is free, and draws on many years of experience in the industry to give you the most accurate estimate for your re-build cost.

If your property is listed or of an alternative construction type, then you may need to get a quote from a chartered surveyor.

Checklist for information that is required for the online quote

 If your house is of a standard construction, then you may not need to have a surveyor come out to your property. Instead, you can use an online calculator to get a quote for your re-build costs.

Before you begin, you'll need to make sure that you have all the relevant information to hand. This checklist will help you to prepare for your online quote. Do you have the following information to hand?:

1. What is the style of your house?

2. Do you know the number of storeys?

3. Do you have the full postcode?

4. What year was the property built?

5. What are the external walls made of?

6. What roof type do you have?

7. Any further information about the foundations, like a cellar?

8. Do you have the gross measurements for the external floor area?

What if I live in a flat or maisonette?

If your property is a conversion flat or purpose built flat, then you will also need:

1. The gross internal floor area

2. The number of storeys in the whole building

3. The total number of flats on the floor that your property is on

Note: Providing the calculations for the the size of your property in square meters can be very daunting. You can find advice on how to measure your property from the RICS.

Should I Use a Chartered Surveyor?

It’s best to use a surveyor if your property is not made of standard materials. This is a better option for properties that are listed, or of an abnormal structure too.

If your property falls into any of these categories, you need to speak to a chartered surveyor, because the re-building of the property could be more expensive, complex and extensive than a standard property.

Note: Some insurers offer unlimited cover which doesn't require a re-build quote, however it may still be cheaper to get a re-build estimate and find a provider that can offer you a better deal. You can read our 8 top tips to reduce your holiday let insurance premium here.

What is covered under the 'sum insured'?

Your buildings insurance will normally cover the entire cost of rebuilding the property, including:

• All materials required to re-build the property

• Costs of skilled labour to re-build the property

• Complete demolition of the property, including foundations if damaged

• The replacement or special features such as lightening systems, walkways, paths and other garden features

• Other services such as lawyers and architects that may be required

• Full clearance of the land

• Fees and costs for planning surveyors and buildings regulators

• Additional external attributes such as swimming pools might need to be declared independently

• Costs of skilled labour to re-build the property

The land on which the property is built will be excluded from the insurance policy.

Note: Some property foundations and plinths are not included in insurance policies because they don't usually get damaged, however they are very expensive to replace. You may need to make a separate declaration for them on your policy, just incase you should you suffer serious circumstances. For more tips on what to look out for with your holiday let insurance, read our post on 5 things you need to know about holiday let insurance.

Are fees included in the quote as well as building costs?

Yes, you will usually have all of your fees, including architects fees, covered under the policy. Make sure that you check this with your provider before you purchase the insurance to avoid any hidden charges down the line.

You need to give consideration to the construction of the property, specifically the construction method, and this should be discussed with your insurer if the property is not of a standard construction.

How Does Covid-19 affect my rebuilding costs?

Covid-19 has had a significant impact on countless businesses, including holiday let agencies and the insurance industry.

Insurance has been affected in numerous ways, from gaining new business to managing claims. With the UK holiday let industry back on it's feet, we are seeing a much higher demand for buildings insurance.

But buildings insurance includes things like materials and skilled labour, which is becoming increasingly harder to secure at low cost. Along with this, we are likely to see a rise in the cost on insurance for buildings.

Summary

When insuring your holiday let property, you need to make sure that the rebuild cost that you quote to your insurer is accurate. It's recommended that you use a chartered surveyor if your property is not of standard construction.

Try to avoid giving your insurer an estimate that is based on your property's current market value. You can read more about buildings and contents insurance here.

For further reading on insurance for holiday letting, you can read our full guide to holiday let insurance.