What is the building insurance value?

Definition and meaning: What exactly is the building insurance value?

The building insurance value is essentially the replacement value (new value) of the building at the current time. It answers the question: "What would it cost today to rebuild this house in the same style, size, and standard of finish on the same site?"

It is important to understand what is not included in the building insurance value :

• The land value : The land itself cannot burn down. Therefore, the land price is not included in the building insurance value . This is the main reason why the building insurance value is often lower than the selling price (market value), as the land is a significant factor in the sale price.
• The sentimental value: If you paid an extra million for the view, that is not reflected in the building's insurance value .
• The surroundings: Gardens or pools often need to be insured separately and are not automatically included in the basic building insurance value .

The building insurance value focuses solely on the building structure: excavation, masonry, roof, interior fittings, and permanently installed technology. It is the technical "hardware" of your house, valued in Swiss francs and centimes.

How is it calculated? Determining the value

Calculation of the building insurance value

Determining the building 's insured value is not a guessing game. It is usually carried out by experts from the cantonal building insurance companies or private appraisers.

The most common method is the calculation of volume according to SIA standards.

• The building volume is measured in cubic meters.
• This volume is multiplied by a price per cubic meter that corresponds to the standard of the house (e.g. 750 CHF/m³ for a basic house, 1'100 CHF/m³ for a high standard).

The result is the basic building insurance value .

Since construction costs are rising, this value is not static. It is usually linked to the "Zurich Construction Cost Index". If the prices for cement and tradespeople increase, your building insurance value (and your premium) automatically rises as well, so that you are not underinsured in the event of damage. This is called indexation.

Factors influencing the building insurance value

Why does your neighbor's house have a different building insurance value than yours, even though they are the same size?

The building insurance value is sensitive to details:

• Standard of finish: Marble floors and smart home systems drive up the building's insured value . Laminate flooring and standard electrical wiring keep it low.
• Construction method: A solid building often has a different replacement value than a wooden house, which affects the building insurance value .
• Accessibility: If your house is located on a steep slope where building materials would have to be flown in by helicopter, this increases the hypothetical reconstruction costs and therefore the building insurance value .
• Historic preservation: If a building needs to be restored according to historical specifications, the costs skyrocket. The building insurance value must reflect these additional costs.

Relevance for property owners: The risk of underinsurance

Why do experts harp so much on the building's insured value ? Because of underinsurance.

Imagine the actual new building value is 1 million Swiss francs. However, your policy lists an old building insurance value of 800,000 Swiss francs because you didn't report the addition of the conservatory.

• Scenario: There's a fire. The damage amounts to 100,000 Swiss francs.
• The trap: The insurance company says, "You are 20% underinsured (800k instead of 1 million)." So they also reduce the compensation by 20%. You only receive 80,000 francs.

A correct building insurance value protects you from this proportional reduction.

Renovations and the building insurance value

The most common mistake made by owners: They renovate, but don't report it.

A new luxury kitchen? A converted attic? A heat pump?

Every investment that increases the value of your property raises its replacement cost. If you don't report these changes, the building's insured value will remain unchanged. While you might save a few francs on your premium, you risk losing thousands in the event of a claim. Regular review of the building's insured value (approximately every 10 years or after any renovations) is mandatory.

Who can help me keep track of everything?

Understanding the difference between market value, tax value, and building insurance value is not trivial.

Modern platforms offer support here. heyloft.ch is a pioneer in this area.

Heyloft 's digital assistant "Loft" helps you distinguish between the different values of your property.

• Loft explains why your selling price (market value) might be 1.5 million, but the building insurance value is only 900,000 francs.
• It helps you understand whether the building insurance value seems plausible in relation to the location and building structure.
• As an independent entity, Loft creates transparency. While the insurance company determines the building's insured value , Loft helps you interpret the data and ensure you're neither over- nor underinsured. It's your digital sparring partner in the jungle of technical terms.

Conclusion

The building insurance value is the "hard currency" of your property. It's not a speculation on rising prices, but a sober calculation of what construction costs today. It differs fundamentally from the market value, as it excludes the land price.

For you as the owner, the building insurance value is crucial. It guarantees that you won't be left with nothing after a total loss. Make sure the building insurance value is indexed and report any renovations to your insurance company immediately. Neglecting the building insurance value is penny-wise and pound-foolish.

If you are unsure how the different values of your property relate to each other and whether your data is plausible, use Loft to learn more about insuring and valuing your property and gain clarity.

Glossary

• Building insurance value: The amount needed to rebuild a building in the event of damage at its current replacement value (excluding land value ).
• Replacement value (new value): The cost of constructing a similar building at today's prices, the basis for the building insurance value .
• Underinsurance: The situation where the insured building value is lower than the actual new construction value, leading to reductions in payouts.
• Cubic volume (building volume): The enclosed volume of a house, which often serves as the basis for calculating the building insurance value .
• Construction cost index: A statistical value that measures inflation in the construction industry and is used to automatically adjust the building insurance value .