How to calculate property rebuild cost

Knowing the cost of rebuilding your home is important when it comes to purchasing sufficient homeowner's or building insurance to cover the eventuality of a rebuild. If you do not buy enough, you will not receive enough insurance money to rebuild if your home is destroyed. Overestimating the cost will see you wasting money on too much insurance.

Measure your home's dimensions. You need these to calculate the square footage of your home.

Calculate the square footage. Your property purchase and mortgage documentation will include this information, but if those documents are not available, measure the length and width of your home in feet and multiply together. Multiply this figure by the number of storeys in your home, to get the square footage. For example, a two-storey house that is 40 feet wide by 30 feet long is 2,400 square feet.

Multiply the square footage by the rebuild cost per square foot for your specific geographic location. Your insurance agent, local realtor or local property tax office will be able to give you the average square foot rebuild cost for your location.

Compare your calculation with that of an online rebuild cost calculator.

Tip

The cost of rebuilding your home is not the same as the market value of your home.

It is advisable to get a surveyor's report to accurately calculate the rebuilding cost of your home.

Your insurance company may have a square footage rebuild cost that they insist upon using, which may vary from the square footage rebuild cost of other insurers.

Re-calculate rebuild costs every few years and adjust your building insurance accordingly. Growth in the economy will mean rebuild costs increase and a decline in the economy will cause building costs to decrease.

Warning

Keep in mind that your calculation is an approximation of typical rebuild costs. Rebuild costs generally pertain to the cost of a rebuild using typical building materials. Costs do not account for high-end or custom materials, special features such as historic architecture and basements, cellars and attic conversions.

If you are using an online calculator, the costs may vary with the specific formula.

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About the Author

Helen Harvey began her writing career in 1990 and has worked in journalism, writing, copy-editing and as a consultant. She has worked for world-class news sources including Reuters and the "Daily Express." She holds a Master of Arts in mass media communications from Cambridge University in the United Kingdom.

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