Reinstatement Cost

[BTC Builder]

My build is finished, warranty provider are ready to publish their certificate but the reinstatement cost is only £400,000.

 

Before we go any further, I built the whole thing myself for way less than that with a labour cost of sub £10k, excluding plumbing. 

 

My worry is that when trying to fund the build in the first place, I was encountering problems with "cost per sqm" which is a load hite with a capital S when you can do everything yourself but I dont want to get into that. 

 

As the house will be worth £1 - 1.2 million, could this reinstatement cost be deemed inadequate, going back to "cost per sqm" again? The house is 6 bed, 6 bathroom, 4000 sqft.

 

This is purely if I sell or take out a mortgage or remortgage, I won't be making any claims.

 

Thanks 

[SteamyTea]

6 minutes ago, BTC Builder said:

"cost per sqm"

 

6 minutes ago, BTC Builder said:

4000 sqft

Make your mind up what units to use.

 

400,000 [£] / 372 [m²] = £1,075/m² which is pretty cheap.

[ToughButterCup]

1 hour ago, BTC Builder said:

...could this reinstatement cost be deemed inadequate...

 

The calculation of units is irrelevant : a calculator will sort that issue out.

 

The word 'deemed' is the key thing. More important is the person (or organisation) that does the deeming : unless you control that entity. 

If there's any doubt about the process and the range of possible answers - then  the cautious answer is yes it is more than likely to be inadequate. 

[Mr Punter]

I think you need to increase the cover.  Sadly it will probably significantly increase the premium.

[BTC Builder]

13 hours ago, SteamyTea said:

 

Make your mind up what units to use.

 

400,000 [£] / 372 [m²] = £1,075/m² which is pretty cheap.

 

To me that's very expensive. Once the VAT has been returned I've built it for £200k. 

 

With two good men on £250 a day, you'd still get it done for less than £400k. It's amazing how much money people waste on dead labour, people who hide, and project managers. I should be greatful really as they keep me busy. 

[JohnMo]

1 hour ago, BTC Builder said:

It's amazing how much money people waste on dead labour, people who hide, and project managers.

But that is real life.

 

1 hour ago, BTC Builder said:

I've built it for £200k

 

Your reinstatement is based on normal terms, not self builder, buying carefully, working long days efficiently etc. Realistic pricing is £2500/m² possibly more depending on spec.

[Roundtuit]

36 minutes ago, JohnMo said:

But that is real life.

 

 

Your reinstatement is based on normal terms, not self builder, buying carefully, working long days efficiently etc. Realistic pricing is £2500/m² possibly more depending on spec.

Plus plot clearance and any additional costs associated with a brownfield site.  Assuming the key requirement of a reinstatement cost is for insurance purposes, I wouldn’t want to estimate on the low side.  It might not make a huge difference to costs as policies tend to have an 'up to' limit in quite broad brackets.  I know for sure that if I had to rebuild my place I would not be hands-on again, so insurance would need to cover a builder and their profit margin.

[Alan Ambrose]

Presumably your foundations, slab and drainage would stay intact.

[Roundtuit]

1 hour ago, Alan Ambrose said:

Presumably your foundations, slab and drainage would stay intact.

Maybe. Depends on why your house needs rebuilding, but I don't think it's an assumption you would make when calculating reinstatement costs.

[ToughButterCup]

3 hours ago, Roundtuit said:

 ...I don't think it's an assumption you would make when calculating reinstatement costs.

 

Who is ' you' ?

 

You?

The organisation deciding how much to pay?

A Buildhubber ?

Your friends?

 

Motivation matters.

[torre]

You'll be underinsured, no insurer will accept a 1M+ property can be rebuilt for anything close to 400K

 

If there's a claim in the future, say 100K corrective work, you won't get anything like that much paid out. Instead you'll get a proportion, relative to their own assessment of realistic reinstatement cost (close to your own market valuation). So probably around 400K/1.2M as a percentage, meaning they'll pay out maybe 30K of your 100K bill for collective work and you'll be left with the rest. 

 

Same applies to any future buyer, their and any mortgage solicitors will flag the warranty isn't worth much.

 

It's probably cheaper to get realistic warranty cover now than retrospectively, but your call if you want to take on the informed risk

[ToughButterCup]

15 minutes ago, torre said:

You'll be underinsured, no insurer will accept a ...

 

You?

 

 

[Roundtuit]

3 hours ago, ToughButterCup said:

 

Who is ' you' ?

 

You?

The organisation deciding how much to pay?

A Buildhubber ?

Your friends?

 

Motivation matters.

Anyone wanting to reasonably accurately calculate rebuild costs surely?