Guide to insuring listed buildings: rebuild cost challenges and underinsurance risks

Published: 17^th November 2025

Listed buildings are treasured pieces of the UK’s architectural heritage, but insuring them properly requires special care. Unlike standard properties, listed homes bring unique challenges when estimating rebuild costs. Owners, insurers, and brokers must navigate strict conservation laws, specialist materials, and skilled labour requirements that can send rebuilding expenses far above those of a modern structure.

Unfortunately, many listed buildings end up underinsured because owners confuse market value with rebuild cost or overlook these extra costs. This guide explores why rebuilding a listed property is so complex and costly, how this often leads to underinsurance, and what UK insurance brokers should do to ensure adequate cover. It draws on expert guidance from Historic England, Historic Environment Scotland, CADW (Wales), and NI Direct, as well as industry data and best practices – including insights from RebuildCostASSESSMENT.com’s valuations.

Under the FCA’s new Consumer Duty rules, brokers have a clear responsibility to help clients avoid underinsurance. By understanding the pitfalls and following some key steps (summarised in a checklist at the end), brokers can protect their clients’ interests and demonstrate due care in insuring listed buildings.

Rebuild cost vs market value: a key distinction

One common cause of underinsurance is the confusion between a building’s market value (sale price) and its rebuild cost (insurance reinstatement cost). The two figures can be dramatically different – especially for listed buildings.

Historic England emphasises that “value in the context of property insurance” means the cost to completely rebuild the structure to its original design, quality and style, compliant with current laws. This often far exceeds what the property might fetch on the open market. In fact, the guidance makes it clear: the open-market value of a property can be at odds with the reinstatement cost.

Market price depends on factors like location, land, and general condition, which are unrelated to reinstatement costs. A Grade II cottage in a remote area, for example, might sell for a modest sum, but rebuilding that same cottage with original materials (stone, oak timbers, lime plaster, etc.) could cost much more than its market value. Additionally, the National Planning Policy Framework (NPPF) use four different Heritage Interests to define the significance of a heritage assets: Architectural & Artistic, Historic, Archaeological. These, alongside the Heritage Values set by Historic England will impact and guide any costs provided for a  listed building reinstatement valuation.

Brokers must ensure clients understand this distinction – insuring a listed home for its purchase price or current market value could leave it severely under-covered for rebuild purposes.

Underinsurance is widespread in the UK property market, and listed buildings are no exception. Recent industry analyses show unacceptably high levels of underinsurance. According to RebuildCostASSESSMENT.com data, roughly 70% of UK buildings are underinsured, with insured sums often covering only about 67% of the true rebuild cost on average.

In the case of listed properties, the gap can be even more pronounced. Nearly four out of five Grade II listed buildings assessed were underinsured, with policies averaging only about 64% of the actual rebuild value needed. In practical terms, this means if disaster strikes, the payout would fall far short – a devastating shortfall the owner would have to make up out of pocket.

The average clause in many policies can reduce claim payouts in proportion to the underinsurance, so even a partial loss could be only partly covered. The financial and emotional toll on homeowners who thought they were “fully insured” can be severe. For brokers, there is also legal risk – underinsured clients may allege negligence against a broker who failed to advise on adequate sums insured. In short, getting the rebuild valuation right is critical.

Let’s examine why rebuild costs for listed buildings are so high and frequently underestimated.

Why listed buildings cost more to rebuild

“As Was” Restoration Laws – Listed Building Consent: One major driver of cost is the legal requirement to restore or repair listed structures “like-for-like”. Planning and heritage legislation across the UK often mandates that any damage to a listed building be reinstated in its original style and materials.

You cannot simply substitute modern replacements or downgrade the quality. In fact, it is typically a criminal offence to demolish, alter, or rebuild a listed building without proper Listed Building Consent. Local conservation officers (or Historic Environment authorities) will insist that repairs use the same methods and materials as the original construction in most cases. As Historic England warns, the planning system may require like-for-like reinstatement, meaning a listed property often needs a “more comprehensive level of insurance cover” than an unlisted modern building would.

What does this mean in practice? It means that if a Grade II listed home is partially damaged – say a period-featured roof or an old stone wall is destroyed – the owner must restore it as it was, rather than opting for cheaper modern fixes. Minor “like-for-like” repairs usually won’t even require consent, but anything that changes the character or materials will and permission to use cheaper alternatives is unlikely to be granted.

For example, imagine a flood knocking down the garden wall of a listed 18th-century stone cottage. The local authority may refuse a quick brick replacement and insist that matching stone be used to rebuild the wall. It’s not unheard of for a historic quarry to be reopened at great expense just to source the right stone for repairs. Similarly, timber beams must be of appropriate species and carpentry style; thatched roofs must be redone in authentic thatch; traditional lime mortar must replace cement, and so on. These heritage compliance needs significantly inflate rebuild costs for listed buildings.

Specialist materials and labour: By their nature, most listed buildings are older structures built with traditional techniques. Their reconstruction demands specialist craftsmen and materials that are far costlier than standard construction. A modern housebuilder or DIY contractor will not suffice; you may need master stonemasons, heritage carpenters, thatchers, leaded-glass artisans, or other specialists who command high fees and may be booked out for months. Many insurers accordingly charge higher premiums for listed properties to reflect this higher claims cost risk.

Crucially, substitute materials are often not acceptable to conservation officers. Historic England’s guidance for reinstating listed structures stresses that authorities may not accept “cheaper” modern materials like reconstituted stone in place of original natural stone. So there is little opportunity to cut costs – the rebuild must effectively be a craftsman-quality restoration project.

If even a portion of the historic structure survives a loss (say a wing of the building remains intact), the expectation is that the rest will be rebuilt to match, not replaced with a generic new build. All this means higher material costs (hand-made clay tiles instead of factory ones, stone from specific quarries, timber of particular cut, lime plaster, wrought ironwork, etc.) and higher labour costs (fewer tradespeople have the requisite skills, and their time is at a premium). It also means potential delays – sourcing rare materials or waiting for the right specialist can slow down the rebuilding, which in turn can increase costs for things like site scaffolding, securing the site, or alternative accommodation for residents.

RebuildCostASSESSMENT.com notes that “listed buildings often cost more to rebuild” partly because Historic England or other bodies may require traditional techniques, which adds time and expense, and delays are common if skilled contractors are hard to find. As our assessments are based on a total loss scenario of 100% EML, loss adjusters will expect all new materials to be required, with no original material reusable; this can have massive cost implications. For instance, if the brickwork was imperial-sized and hand-fired, each brick would need to be individually made to match the original. A recent renovation on a brick façade, which needed 26,000 new bricks, cost just under £1,000,000.

Longer rebuild times and hidden complexities: Repairing a listed property is usually a painstaking process. A simple renovation on a modern house might be done in weeks, whereas renovation or repair work on a listed building tends to take longer. Every aspect – from obtaining consent, to finding craftsmen, to performing the work – can stretch the timeline.

Time is money in construction; longer projects mean higher labour bills and ongoing hiring of equipment. Surveyors with historic building expertise will factor in contingency costs for the “unknown unknowns.”

Furthermore, if the building is commercial or open to the public, there can be additional requirements that drive up rebuild cost. For instance, Historic England notes that if a historic building has a public use (say a listed wedding venue or a period B&B), additional statutory duties like disability access improvements, fire safety upgrades, or other regulations might come into play during rebuilding. While heritage buildings can sometimes get exemptions from certain modern building regulations to preserve their character, safety laws (fire alarms, emergency exits, etc.) will still apply, and integrating these sensitively can be costly. All these factors mean a listed building’s rebuild cost is highly individualised – determined by its age, construction methods, features, location and usage.

In short, it’s not simply the “listed” status in isolation that makes insurance valuations higher – it’s the cascade of consequences that listed status triggers. As one insurance expert at homeprotect put it, “it is not strictly the listed status that drives up rebuild costs. It is the cost of traditional building materials and specialist labourers, as well as location, timing and additional unforeseen fees” that collectively impact listed building rebuild costs. To illustrate, a straightforward brick and block modern rebuild might cost under £2,000 per square metre, but rebuilding a fire-damaged thatched Grade II cottage with bespoke oak timbers, ashlar stonework and skilled thatchers could run £3,500+ per square metre. The only way to be sure of the cost is to undertake a thorough reinstatement cost assessment that accounts for all these listed-building intricacies.

Insurance best practices for listed properties

Given the above challenges, how can brokers and owners make sure a listed building is properly insured for its rebuild value? Below are some best practices and considerations, in line with industry guidance and Consumer Duty expectations:

• Obtain a professional Rebuild Cost Assessment: For any listed building – especially larger or older examples – a professional Reinstatement Cost Assessment (RCA) is highly recommended.

  
  

  • Standard online calculators or generic “£ per square foot” estimates are often inadequate for listed buildings because they miss many of the special factors we’ve outlined. The BCIS House Rebuilding Cost Calculator’s own terms and conditions state: “The Calculator is intended for general guidance only and is not a substitute for professional advice nor should it be used to set the sum insured on a buildings insurance policy.”

    
    

  • The Association of British Insurers (ABI) has tools for typical homes, but listed buildings really require an expert eye. A qualified surveyor will measure the property (including any unique features or outbuildings), determine the construction techniques, and price out the full like-for-like rebuild. This includes often-overlooked costs such as demolition and debris removal, site access difficulties, temporary works, professional fees (architects, engineers, planning consultants experienced in heritage projects), and compliance with any current building codes.

    
    

  • Historic England’s official guidance suggests engaging professionals to establish the correct reinstatement cost and updating that valuation regularly. Many listed homeowners go through the Listed Property Owners’ Club, brokers or insurers to commission RCAs.

    
    

  • RebuildCostASSESSMENT.com is a specialist provider, performing over 4,000 valuations each month and is now by far the leading provider of building valuations to insurers, brokers and property owners in the UK. Such services (RICS-regulated) use cost databases (like RICS BCIS) tailored for heritage buildings and can produce detailed reports without always needing a full site visit, we always recommend a site visit for listed and thatched buildings as standard as we cannot see all features remotely using online data and expertise. Engaging these experts gives brokers a defensible basis for the sum insured and greatly reduces the risk of underinsurance.

• Allow for conservation requirements in the sum insured: When setting the Buildings Sum Insured, ensure it explicitly covers the need for traditional materials and methods.

  
  

  • If the assessment notes that special stone, hand-crafted features, or imported materials are required, those must be included.

    
    

  • Likewise, provisions for delays and cost inflation should be built in. Listed building projects can run over time; a good policy might use a “day one” insured value plus an uplift (e.g. index-linked or a 50% inflation buffer) so that if rebuilding takes a few years the sum insured remains adequate.

    
    

  • Always check that the policy’s declared value corresponds to a current rebuild cost and that any inflation clauses are understood by the client. Don’t rely on index-linking alone if the base valuation is out of date – index adjustments won’t fix an initially underestimated figure.

    
    

• Use specialist insurers or policy endorsements: Not all insurance policies are the same for listed buildings. Some mainstream home insurers may struggle with the unique aspects of a Grade II home.

  
  

  • It can be wise to place the risk with a specialist listed property insurer or add endorsements that explicitly cover things like “matching materials”, “ornate features”, and extended repair times.

    
    

  • Check if the policy covers the full cost of complying with Listed Building Consent and any local authority requirements (some policies have clauses covering increased cost of construction due to government or local authority regulations – these should be maxed out for a listed building).

    
    

  • Ensure architects’ and surveyors’ fees are covered in addition to the raw rebuild cost (policies typically cover these as a percentage of the claim – listed projects might incur higher professional fees).

    
    

  • It’s also worth considering insurance for accidental damage during restoration (since bringing contractors in to repair a listed home can pose risks to delicate historic fabric). The premium will be higher for a listed building, but that reflects the genuine risk – a specialist policy might also offer risk management advice, such as site security or fire prevention for historic homes.

• Maintain the property and mitigate risks: While not directly part of calculating the sum insured, it’s important to advise clients that preventative maintenance can save headaches (and insurance claims).

  
  

  • Historic England notes that insurance is just one part of risk management; owners should keep roofs, gutters, wiring etc. in good repair to avoid preventable losses. Many listed building insurers will require that the property is kept wind- and weather-proof and may impose requirements like periodic electrical inspections (since many listed homes have old wiring).

    
    

  • Emphasise fire risk management in particular – fire is a historic building’s greatest enemy, and insurers/Brokers should encourage installing modern alarm systems, even sprinklers if feasible. Some insurers give premium discounts for risk improvements, which can help offset the cost of the higher cover.

    
    

• Regularly review and update the rebuild valuation: Construction costs have been extremely volatile in recent years, with spikes in material and labour costs. What might have been an adequate sum insured five years ago could be seriously deficient now. Due to some major building projects in the capital, there is a shortage of several types of stone (Limestone, gritstone and sandstone), costs are averaging at £4,500 a cubic metre, impacting other works across the country whilst quarries struggle to keep up.

  
  

  • Brokers should set a schedule to review the rebuild value periodically (ideally every 3 years) or whenever substantial works are done on the property. Even if index-linking is in place, it’s wise to get a fresh professional valuation at least once in a while, since listed buildings might not follow generic inflation indices (for example, the cost of oak or lead or skilled stonemasonry might rise faster than general building indices). This is especially true after the surge in building costs seen in 2021–2023.

    
    

• Document Advice and Decisions: Under the Consumer Duty, it’s crucial for brokers to keep records of the advice given regarding sums insured and underinsurance.

  
  

  • If a client declines a professional valuation or insists on insuring for a lower amount, that should be noted along with the broker’s warning of the risks.

    
    

  • Conversely, if the broker arranges a Rebuild Cost Assessment and adjusts the cover, that proactive step should be recorded as part of meeting the duty to ensure good customer outcomes.

    
    

In the event of a future dispute or claim, this documentation will be vital. The FCA and ombudsman have indicated that failing to advise on underinsurance where it was foreseeable could be seen as causing harm to the consumer, so brokers must be able to evidence that they took reasonable steps to prevent that harm (e.g. recommending an adequate sum insured based on expert data)

Consumer Duty and broker responsibility

As of 2023, the FCA’s Consumer Duty imposes a higher standard of care for insurance firms and intermediaries. Simply put, brokers must act in the customer’s best interests and avoid foreseeable harm, which squarely includes the harm of an underinsured claim. Arranging a policy for a listed home with an insufficient sum insured could breach the expectation to deliver “fair value” and appropriate coverage to the client.

Industry commentators note that underinsurance directly conflicts with the fair value principle under Consumer Duty, since a policy that would not pay out enough fails to meet the customer’s needs. The FCA has signalled it will monitor outcomes like claims not met in full as potential indicators of firms not meeting the Duty.

Brokers, therefore, are now on the frontline of tackling underinsurance. In a 2024 review, the FCA emphasised that brokers should be asking the right questions and providing clear advice at inception and renewal to ensure customers can make informed decisions about coverage. This means having frank conversations with clients about rebuild costs and the importance of insuring for the correct amount.

It may not be an easy conversation (some clients worry higher sums insured will mean higher premiums), but it is necessary. Brokers should explain the implications of underinsurance – including how claim payouts can be reduced proportionally (the average clause) or even refused if the sum insured is very low. With listed buildings, brokers can highlight the specific factors discussed in this guide (e.g. “Yes, your home might only be worth £300k on the market, but to restore those hand-carved beams and stone walls after a fire could cost double that”). By educating clients, brokers fulfil the Duty’s requirements to empower customers with information and prevent harm.

RebuildCostASSESSMENT.com’s guide on ‘difficult conversation’ is a useful asset for such a scenario. Read it here.

RebuildCostASSESSMENT.com’s own 2023 survey of UK brokers found that the majority are acutely aware of this issue – most brokers believe underinsurance must be addressed as part of their Consumer Duty obligations to clients. Encouragingly, many brokers are now proactively using tools like desktop rebuild assessments to get sums insured right, rather than relying on guesswork.

Checklist: Ensuring adequate cover for listed buildings (Broker’s Guide)

To wrap up, here’s a quick-reference checklist for insurance brokers when arranging cover for a listed building:

• Confirm listing status & grade: Always ask and note if the property is listed (Grade I, II*, II in England/Wales; Category A, B, C in Scotland; Grade A, B+, B in NI). The grade can indicate the level of special features or restrictions. This informs the underwriter and flags the need for specialist attention.

  
  

• Educate the client on rebuild cost vs market value: Explain that rebuild cost does not equal market value for listed homes. Use examples if necessary (e.g. specialist materials, legal requirements to rebuild historically). Ensure the client understands why the sum insured might be higher than their purchase price or mortgage valuation.

  
  

• Arrange a professional Rebuild Cost Assessment: Do not rely on guesswork. For most listed properties, especially high-value or unique ones, obtain a rebuild valuation from RICS-regulated RebuildCostASSESSMENT.com. Make it a standard part of your service under Consumer Duty to recommend a professional valuation to get the sum insured right.

  
  

• Include all related costs: When setting the Buildings Sum Insured, make sure it covers demolition/clearance, architect and engineering fees, and any compliance costs (e.g. meeting modern building regs or local authority requirements). For listed buildings, double-check that “like-for-like materials” are accounted for – if the valuation assumes expensive materials, the policy should too. If the property has outbuildings, historic boundary walls, gates, etc., include those in the cover as required (listed status can extend to such structures).

  
  

• Check policy coverages and clauses: Use a policy wording suitable for listed buildings. Look for clauses on matching repairs, conservation authority requirements, or extended replacement cost. Avoid policies with restrictive repair terms that could conflict with Listed Building Consent obligations. Ensure no exclusions or limits would hinder a full payout (for example, some policies might cap fees or require special endorsements for unusual features like stained glass or ornate plasterwork – add those if needed).

  
  

• Advise on appropriate add-ons: Depending on the situation, suggest cover extensions such as increased rebuild cost protection (or Day One Uplift) (some insurers offer, say, 25% extra cover if needed), or alternative accommodation for a sufficient duration (rebuilding a listed home can take longer, so standard 12-month loss-of-use cover may need extending to 24+ months). If the client is renovating the listed building, consider a specialist renovation policy or contract works cover – standard insurance might void if major works are underway without notification.

  
  

• Index-link or review annually: Make sure the policy sum insured is index-linked to adjust for inflation each year. However, also set a diary to review the valuation every three years. After any significant claim or repair, or changes in building costs, update the RCA. In high inflation periods, consider mid-term adjustments rather than waiting a full year. Essentially, don’t “set and forget” the rebuild figure on a listed property.

  
  

• Discuss underinsurance consequences: Be upfront with the client about what happens if they underinsure. Explain the average clause with a simple example (e.g. “If you insure for only half the real cost, the insurer may only pay half of any claim”). Emphasise that underinsuring to save a bit on premiums is not worth it – it defeats the purpose of insurance. This conversation is part of treating customers fairly and discharging your duty to prevent harm. Document that you had this discussion.

Provide documentation and support: Give the client copies of any valuation reports and your calculations. It adds transparency. Also, provide guidance (or literature) from trusted sources – e.g. a Historic England or Historic Scotland leaflet on insuring historic buildings – to reinforce the points. This helps the client feel informed and builds trust that you, as the broker, understand the nuances.

By following the above steps, brokers can significantly reduce the risk of underinsuring a listed building. In doing so, you protect your client’s precious property and comply with your professional and regulatory obligations. Remember that accuracy and vigilance are key: listed buildings can absolutely be insured effectively, but it takes a bit more diligence upfront. The extra effort is well worth it when it ensures that, if the worst happens, a beautiful historic home or building can rise again from the ashes, true to its former glory, with insurance covering the full cost.