Buildings Sum Insured: How to Calculate Your Rebuild Cost

By Jim Flannery ACII, Brand Ambassador, OMC Claims. Over 40 years in insurance claims and a founding member of the Irish Claims Consultants Association.

As loss assessors, we frequently arrive at domestic losses where the first look at the property and the first look at the buildings sum insured tell two different stories. The policyholder has often maintained their cover diligently, claims free, for years or even decades, and learns only at claim time that the figure at the heart of the policy was never right. Whenever that happens, the average clause falls hardest on the people who least expected it.

This guide explains what the buildings sum insured actually is, why it is not your home’s market value, what the figure must include, and how to calculate it properly, whether your house fits the standard guidance or needs a professional eye.

What is the buildings sum insured?

Buildings sum insured, value at risk, rebuilding cost assessment and reinstatement valuation are interchangeable terms in the claims sector, and they all refer to one important number: the estimated cost of full buildings reinstatement following a total loss, including outbuildings, driveways, patios and boundary walls. It represents the absolute limit payable by your insurer under the buildings section of the policy, and it must therefore carry adequate provision for everything that section covers. For most of us, the family home is the largest asset we will ever own, and this single figure is what protects it.

Sum insured vs market value: they are not the same number

The most common and most costly misunderstanding in Irish home insurance: a significant share of policyholders believe the buildings sum insured should be what the house would fetch if sold. It should not. Market value reflects location, demand and land; the rebuild cost reflects construction, fees and regulation. The two figures have no relationship whatsoever. In parts of Dublin, market value can run far ahead of rebuild cost; in parts of rural Ireland, a house can cost more to rebuild than it would sell for. When we explain this at a claim, the sentence we hear next is almost always the same: “well, nobody told me that when I took out my insurance.” Consider yourself told, and be a step ahead of most policyholders.

What your rebuild cost must include

The calculation is based on a 100% total loss scenario, and the new build itself is only part of it. A complete figure includes:

• Demolition, site clearance and disposal off site

• Temporary works to stabilise adjoining structures

• Dealing with hazardous material

• The new build itself

• Compliance with current building regulations

• An allowance for construction inflation

• Design team professional fees

• Provision for planning and utility fees and charges

• VAT on all of the above

Leave out the periphery costs and the figure can be materially short before a block is laid. In theory the right figure varies slightly from policy to policy with the cover afforded; in practice it is sensibly rounded up to override such differences.

How much are Irish rebuild costs rising?

Quickly, and for several years running. Industry analyses estimate that Irish house rebuilding costs have risen by roughly a third since 2021, and the Society of Chartered Surveyors Ireland’s most recent guidance recorded national average construction costs rising again by around 7% year on year. Recent industry figures put typical rebuild costs in a broad range of roughly €2,400 to €3,300 per square metre depending on size, design, finishes and region, which is why the same house carries a very different correct sum insured in different parts of the country. The practical consequence is drift: a figure set even three or four years ago and never revisited can now be materially short, without the policyholder having done anything wrong. This is also why insurer research suggests as many as one in five Irish homes is underinsured.

How to calculate your buildings sum insured

For standard properties, you do not need to build the estimate from scratch. Measure the internal dimensions of the property from front to back and side to side, multiply by the number of floors. Add on any single story extensions separately. Add on for any garage or outbuildings and higher than average areas of driveway, boundary walls, attic conversions or built-in finishes. The Society of Chartered Surveyors Ireland (SCSI) produces an annual Guide to House Rebuilding Costs for insurance purposes, available at scsi.ie, with rates per square metre broken down by house type and region across Ireland. It is worth studying the guide carefully to understand its scope and limitations before relying on it: it is designed around estate-type houses built since the 1960s, in the standard configurations it lists.

One practical point in its favour: most of the loss adjusting firms engaged by insurers use this guide, or a version of it, as their basis for reviewing the adequacy of the sum insured when first dispatched to a new claim. Using the same reference, reviewed annually before renewal, means your figure and the adjuster’s figure start from the same place.

What the SCSI figures include, and what they leave out

Understanding the scope of the SCSI figures prevents both double counting and gaps. The guide’s rebuild figures make allowance for demolition costs, professional fees incurred in reinstatement, a concrete path around the house, driveway and boundary reinstatement, and VAT, applied at 13.5% on building costs and 23% on professional fees. Three things sit outside the standard figures and need separate treatment:

• Outbuildings. Garages, sheds and garden structures are not in the base figures and should be added with a realistic estimate. The guide publishes indicative garage costs for this purpose.

• Contents. Carpets, curtains and furniture belong to the contents sum insured, not the buildings figure, and need their own honest valuation.

• Non-standard features. Basements, unusual construction methods and high-specification finishes push a property outside the standard figures and toward a professional valuation.

When you need a professional valuation

Where a property falls outside the parameters of the SCSI guidance, the sum insured should be assessed by a suitably qualified and experienced professional. That includes houses of more than two storeys, properties with basements, one-off and period properties, apartment buildings and anything architecturally unusual. The cost of a professional reinstatement valuation is small against what it protects: the correct settlement of every future claim on the policy.

What happens if the figure is too low

If your buildings sum insured is below the true rebuild cost, you are underinsured, and most policies allow the insurer to reduce any claim in proportion to the shortfall under the condition of average. It surprises many policyholders to learn that this affects the small escape of water claim in exactly the same way as the large fire loss. The proportion is simple to state: what ratio does the sum actually insured bear to the sum that ought to be insured? If €100,000 is insured where €200,000 ought to be, you have purchased 50% of the cover you should have, and 50% is what claims can be expected to pay. The full mechanics, with worked examples, are in our guides to underinsurance and the average clause.

If underinsurance is suggested on a live claim, the position is not always final. By engaging a regulated loss assessor at the outset, the effect of any potential underinsurance can be made the subject of negotiation, and we have had considerable success both in defending the sufficiency of sums insured and in managing claims to mitigate the impact where a shortfall is unavoidable.

Renovations and extensions: tell your insurer

Any work that changes the rebuild cost of the house belongs in the policy: extensions, attic conversions, garden rooms, significant upgrades to kitchens or finishes, external insulation or solar panels. Notify your insurer when the work is complete and have the sum insured adjusted to match. The point is often missed because premiums feel like the thing being managed at renewal, when in fact the sum insured is the number doing the protecting. Strengthening sums insured may nudge the premium upwards, but it is the difference between a policy that performs at claim time and one that does not.

Frequently asked questions

What is the buildings sum insured?
The estimated cost of completely rebuilding your home after a total loss, including demolition, fees and VAT. It is the maximum your insurer will pay under the buildings section of your policy.

Is the buildings sum insured the same as my house’s market value?
No. Market value reflects location and demand; the sum insured reflects construction costs. The two have no fixed relationship, and either can be the higher figure depending on where you live.

How do I calculate my buildings sum insured?
For standard estate-type houses, use the Society of Chartered Surveyors Ireland annual Guide to House Rebuilding Costs, reviewed before each renewal. For non-standard, period, extended or multi-storey properties, have a qualified professional carry out a reinstatement valuation.

What happens if I undervalue my sum insured?
You are underinsured, and most policies allow the insurer to reduce any claim, small or large, in proportion to the shortfall under the condition of average. The uninsured balance becomes your cost.

Do I need to tell my insurer about renovations and extensions?
Yes. Anything that increases the rebuild cost of the house should be notified when the work completes, and the sum insured adjusted. Until it is, the increase in value is effectively uninsured and can drag the whole policy into underinsurance.

Are outbuildings included in the buildings sum insured?
Not in the standard SCSI figures. Garages, sheds and other outbuildings should be added to the sum insured with a realistic estimate of their rebuild cost, and the SCSI guide publishes indicative garage figures to help.

Who checks my sum insured when I make a claim?
The loss adjuster appointed by your insurer will review the adequacy of the sum insured early in the claim, commonly against the SCSI guidance. If a shortfall is suggested, the figures can be reviewed and negotiated on your behalf by a loss assessor.

About OMC Claims

OMC Claims (Owens McCarthy Ltd) is Ireland’s largest independent firm of loss assessors, acting only for policyholders, never for insurers. We provide nationwide coverage, with loss assessors serving Dublin, Cork, Limerick and every other county in Ireland. Part of the Fexco group and regulated by the Central Bank of Ireland (Registration Number C-46734), our team brings over 250 years of combined claims experience and handles more than 2,000 home and business claims a year, from straightforward domestic losses to large and complex commercial claims. We assess the damage, prepare and value your claim, and negotiate with your insurer to work to secure the settlement you are entitled to.

Disclaimer: This content is for general informational purposes only and aims to provide an overview of the buildings sum insured. It does not constitute legal, financial, or insurance advice. For guidance tailored to your specific circumstances, please consult a claims professional or your insurance broker/provider.