How to cost the reconstruction of your home in the event of a claim

(fiona mcclean) #1

Hi and thanks again for the advice concerning Hercules, the Cedre du Liban. Feeling that I am getting somewhere.

I followed a suggestion which was to look into the insurance company underwritten by Lloyds of London, On the online request page for a quote they ask how much I want my house insured for in the case of it having to be rebuilt from scratch. I havent a clue so googled it and didn't have any luck so naively put in the sum I paid for it. Shows what little I know.

Again, asking for advice. Does anyone know how to find out about this? And if anyone has experience of this company.

Thank you


(Chris Knox-Johnston) #2

It does not work like it does in England.

Once again the coverage can vary from insurer to insurer. In France it really depends on the insurance company and that is why some cheap insurance companies can provide cheap insurance premiums. With these companies they limit their amount of reimbursement for the building. So it is best to check the individual policy of your own current insurance.

Once again, ask the question in writing and get the answer in writing.

Most people look only at the price and they are so wrong. It is very much worth paying 100€ more for a good contract. 100€ can mean 100 000€ in a case of a claim

In the contracts we have, if the building is in a good state, they pay for the reconstruction cost without any limit and with the same materials.

The application of a deduction because of poor maintenance is important (up to 25% and there have been cases where an expert asked for more than 25%. There can also be a deduction, for example, if the new roof replaces one in poor condition or one in need of replacement.

There are two obvious conditions: first you have to rebuild the house and secondly the reconstruction should not last more than 2 years (there could be some exceptions of course).

(Dominique Perot) #3

Hi, as a public loss assessor, this is my daily work, working for companies and individuals and against insurances companies, to indemnify people after large damages ( fire, flooding etc…)

Insurers in France ends to insure private properties by the number of living rooms (or by m2) . The principle is to rebuild the house « as is » five minutes before the damage. There are two options : either « valeur à neuf » or vétusté déduite » let me explain the differences :
in both cases «vétusté » ( obsolescence) is estimated; i.e. assuming a tile roof can last 50 years , if your roof is 25 years old, it is at 50% of its total life time, meaning that the value « after obsolescence » or valeur « vetusté deduite » is 50%
If the cost of a new roof is 100, the insurance company ( for an insurance option « vetusté deduite ») will refund you 50.
if you are insured « valeur à neuf » you would expect to see you roof refunded 100. This is not the case. The insurances companies refund only partially the this obsolescence, generally up to 25 % meaning that in our current case, you would be refunded 50% after the damage and up to 25 more AFTER the rebuilding and under condition to provide the invoice.

The obsolescence is estimated by trade ( roof, walls, electricity, plumbing…)
The content of the house ( furniture, clothing, valuables....) can be estimated nowadays by 15k€ multiplied by the number of living rooms. (outside unusual items like collections, or pianos,or collections of pianos)

In summary you can be insured by a continental insurer assuming you determine the right number of living rooms ( remember that room over 30 or 40 m2 counts for 2) and that you multiply this number by 15k€ to determine the capital insured for the content ( furniture, clothing….) take care to the amount of capital devoted to valuable objets (eg 5% of 45000 is only 2250)

hope you will find this (short) abstract on french insurance helpful, resembler to always be insured Valeur à neuf, to have the good number of living rooms, and to take care to the insured capital.

Should the need arise, in case of large damage, call a loss assessor ( advice is not to contract with the vultures coming on site while the firemen are still there) otherwise you would play with the insurance and theirs experts a game whose rules are not known to you, resulting in a poor indemnification.

for examples you can read my blog of loan assessor here

(fiona mcclean) #4

Thanks for your thorough reply. I am reconsidering and may keep to the french insurer but still anxious about tree problem as this might also pose a problem in the case of a complete reconstruction as it is so near the property

(fiona mcclean) #5

Thanks definately worth checking out

(fiona mcclean) #6

Thanks Chris

That is a useful tip

(fiona mcclean) #7

Hi Nick

Thank you so much for this advice. Its through the process of owning property that at the same time I learn something different about France.

(Michael Blackmore) #8

A helpful analysis and warning. However the insurance premium for our French house is considerably higher than for our house in UK which is also mainly a stone house of about the same age converted from a coach house and stables. The rebuilding cost is that advised by the insurers in UK.

(Ian Morris) #9

Insurers in the UK invariably base their policies/premiums on “building reinstatement cost”, and as a practising Chartered Building Surveyor in the UK I was frequently asked to provide such figures for clients. My work was aided by publications from the Building Cost Information Service who produce figures annually for typical UK type building construction. However, the BCIS tables were not always sufficient because insurers require the reinstatement cost to be on a “like for like” basis. In other words, for a 1920’s art nouveau house with curved glass metal-framed windows, fancy balustrades and walnut-panelled doors the building reinstatement cost would be considerably more than the figure in the BCIS table for an “ordinary” house of the same size. The same could be said to apply to a house built in a very steep site, requiring special foundations.

I can recall the case of a 4-storey Victorian house in south London where at the time of purchase the buyer had decided to insure it for the price he had paid for the property assuming that, as the purchase cost included the land as well, he would be well covered for reinstatement of the building alone. He contacted me a year or two later, after a serious fire had destroyed much of the interior, and because his insurers were refusing to pay the full cost of reinstatement. When I calculated the cost of rebuildung the entire house, with all of its quirky features, the total was twice the cost he had paid for the property ! His insueres applied what they call “average” and they offered to pay only 50% of the repair bill. That’s how building insurance works under a UK based policy. The figure for which you insure must allow for rebuilding to exactly the same design, and using exactly the same materials (upgraded only to comply with contemporary regulations). Owners of historic and/or stone built houses beware !

By contrast, French insurers by and large do not concern themselves with building reinstatement costs but instead base their policies/premiums on the number of rooms in the building. I did not hesitate, therefore, in insuring my house here with a French insurer.

(Michael Blackmore) #10

Since the basis of rebuilding is part of the French polices I assume that it would be on the basis that the rebuilt house did conform to all current "norms" otherwise, as you say, it would not be passed by the relevant authorities. However I assumed this and haven't checked with my insurer. Perhaps I should.

(Rhys Williams) #11

Isn't there a problemn with "as it was..." for two reasons. (1) If the house doesn't meet all the up-to-date building normes and would show nonconformities on a sale diagnostic the replacement will surely have to be done to the current normes. Eg the consuel wouldn't permit a non-conforming new electrical installtion to be connected up, and you surely wouldn't replace asbestos roof undersheets with the same; and 2 wouldn't there be an issue of 'improvement' that you'd want to do anyway and would then have to cover the cost of yourself. I can see these becoming a huge argument in the middle of a very difficult time. New for old might cost a lot more but might make life easier. Assuming you can get a policy giving this, and if it covered all aspects.

(Michael Blackmore) #12

I am sure there will be advice from others better informed than I.

As I understand it it is a legal requirement for your house to be insured (buildings at least) in France. I don't know whether or not this can be satisfied by using an insurer who is not registered in France. Our insurance is for the house to be rebuilt "as it was where it is" (to quote the Fenici)and thus there is no valuation for the structure. The premiums seem to be based on the type of construction and the "norms" applied to building in the immediate area.

From our experience it may be that the choice of agent is more important than the choice of underwriter. Some agents seem to be remarkably uninterested in any kind of "service" others provide excellent support and advice. Ours visited us at the house to advise about cover and also arranged to attend with an expert when we had a dispute over a leaking roof. He also provided us with advice about claims in the event of a car accident (even though our car is not insured with him as it is UK based) and copies of the official accident report form in English. Sadly he has now sold the business but, so far, the new owners seem to provide a good service although we haven't asked for anything recently.

(Chris Knox-Johnston) #13

Also remember that, in the event of a total loss of the building, you would still have the land and all the services, so doing it by M2 would be better. So the purchase price included all these.

I believe the French system is based on the M2 and the number of floors and rooms.

For the contents value, one way is to take the replacement with new of all the contents of the kitchen and multiply that by the number of all the rooms in the house.

(Nick Ord) #14

Fiona, this is what is known as a reinstatement valuation or a fire valuation. It’s fairly standard business practise. At a commercial level, it’s something that we do frequently, but we have never had the request for domestic property.
The essential is to establish what it would cost you to rebuild in the event the property is completely destroyed. I would suggest that an overall calculation on a m2 basis would suffice.
If you know a local architect, or reputable house builder, they should be able to give you a good guide m2 rebuild price.