CalcVerse

Property Insurance Replacement Value Calculator

Buildings insurance should cover the cost to rebuild, not the market price. Rebuild cost is the floor area times a local build rate, plus demolition, professional fees and an allowance for cost inflation.

Also called: Rebuild cost calculator · Home insurance replacement cost calculator

  • Last updated
  • Formula tested against reference values

Your numbers

Example figure — use a local builder’s, surveyor’s or insurer’s rate for your type of building.

Typically the policy year plus the time a rebuild would take.

From your policy wording. Use 100 if partial claims are reduced whenever you are underinsured at all.

Result

Estimated replacement value
—

Calculating…

Building and extras
—
Demolition and fees
—
Inflation allowance
—
Sum insured as % of replacement value
—
Shortfall in cover
—
Minimum cover to avoid a reduced payout
—
Payout on the example claim
—

How to use this calculator

  1. Enter or choose floor area.
  2. Enter or choose rebuild cost per unit area.
  3. Enter or choose garage, outbuildings, walls and extras.
  4. Enter or choose demolition and debris removal.
  5. Enter or choose professional fees and permits.
  6. The estimated replacement value updates as you type. Use Copy result or Share to keep it.

Method

Base = Area × Cost + Extras; Replacement value = Base × (1 + Demolition% + Fees%) × (1 + Inflation)^(Months ÷ 12); Required = Replacement value × Coinsurance%; Payout = min(Claim, Cover, Claim × Cover ÷ Required) if Cover < Required, else min(Claim, Cover)

Cover
the sum insured on your policy
Coinsurance%
the share of replacement value you must insure to avoid a proportional cut

Worked example

  1. Base = 2,000 × 150 + 20,000 = $320,000.
  2. Add 15% for demolition and fees = $368,000; add 4% inflation = $382,720.
  3. 80% of 382,720 = $306,176 required; cover is $300,000.
  4. Payout on a $100,000 claim = 100,000 × 300,000 ÷ 306,176 = $97,982.86.

Rebuilding would cost about $382,720; with $300,000 of cover you are slightly below the 80% requirement, so a $100,000 claim pays $97,982.86.

What the result means

Raise the sum insured to at least the replacement value if you can; anything below the coinsurance level cuts every partial claim, and anything below the full value leaves you short after a total loss.

Assumptions and limits

  • The rebuild rate, percentages and policy terms are your own figures.
  • Allowances are a percentage of the building and extras cost.
  • Not a professional rebuild valuation; listed, unusual or high-specification buildings can cost far more.
  • Policy terms vary; some insurers use 100% average, some none, and contents cover is separate.

Questions

Why is rebuild cost different from market value?

Market value includes the land and location, which do not burn down. Rebuild cost can be lower or, for older or special buildings, much higher.

What is the average or coinsurance clause?

If you insure for less than the required share of the replacement value, the insurer pays the same proportion of any claim. It stops people saving premium by underinsuring.

Please note: This calculator gives estimates for planning. It is not financial advice, and lenders’ actual terms, fees and rounding may differ.