Reinstatement cost vs market value.
These two figures are often assumed to be the same. They rarely are — and mixing them up is the single most common reason UK homes are wrongly insured.
Two questions, two different answers.
Market Value
Answers "what could I sell it for?" - driven by land, location and demand.
Reinstatement Cost
Answers "what would it cost to rebuild?" - driven by construction cost per m² and materials.
No Reliable Shortcut
The two can diverge in either direction depending on the property - only a proper assessment tells you which.
Set side by side, the difference is clear.
| Market Value | Reinstatement Cost | |
|---|---|---|
| Answers the question | "What could I sell it for?" | "What would it cost to rebuild it?" |
| Includes the land? | Yes | No |
| Driven by | Local demand, comparable sales, location | Construction cost per m², materials, labour, demolition, fees |
| Used for | Selling, buying, mortgage lending decisions | Setting your buildings insurance sum insured |
| Who calculates it | Estate agent, RICS valuer (for sale/mortgage) | RICS surveyor using BCIS rebuild cost data |
| Typical London example | £800,000 | £350,000 |
Answers the question
Includes the land?
Driven by
Used for
Who calculates it
Typical London example
In central London and other high-value areas, land can account for well over half of a property's market price — so reinstatement cost is very often significantly lower than market value. In some rural or listed properties, the opposite is true: construction costs (especially for heritage materials and methods) can push reinstatement cost above market value. There's no reliable shortcut — it depends on the individual property, which is why a proper assessment matters more than a rule of thumb.
Getting this wrong costs you either way.
Insure at market value when it's higher than reinstatement cost, and you're paying premium on cover you can never actually claim — insurers only ever pay out the cost to rebuild, never the market price of the land.
Insure below true reinstatement cost, and you're underinsured — meaning any claim, not just a total loss, gets reduced under the insurer's average clause. See exactly how that works in What Happens If My Property Is Underinsured?
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Related homeowner guides
What Is an RCA?
A plain-English explainer - what it is, and why it's not the same as market value.
Read the guidearrow_forward
Do I Need One?
The specific situations that mean it's time to get an assessment.
Read the guidearrow_forwardHow Much Does It Cost?
What determines price, and how to get a fixed quote.
Read the guidearrow_forwardCommon questions.
Common questions homeowners ask when comparing reinstatement cost and market value.