Most householders could probably assess their homes current value fairly accurately. But it seems many of us wouldn’t know the cost of actually reconstructing our property if it was completely destroyed - information that is vital in order to arrange correct buildings insurance cover - unless you opt for a policy with unlimited cover.

One of the purposes of buildings insurance is to protect householders by covering damage to the structure of their property as a result of catastrophes such as fire, flood, lightening or subsidence. The sum insured should be sufficient to cover rebuilding your home completely if necessary. However, the rebuilding cost is usually less than the market value of your home as this is based only on the material cost of replacing your home as a building.

Rises in the market value of properties i.e. what a buyer is willing to pay to buy your home do not necessarily have any effect on what it would cost to rebuild your property from scratch.

Despite this, more than a third (35%) of respondents to the Halifax General Insurance research mistakenly thought that they needed to insure their home for the full market value of the property, rather than the rebuild cost.

More worryingly, a similar percentage (33%) wrongly believes it is not their responsibility to ensure that their buildings insurance is adequate for a rebuild which could mean that any potential shortfall in their cover goes unnoticed until the worst happens.

And of those who did recognise their responsibility to check their insurance cover, 22% still hadn’t taken any action to check the rebuilding cost of their home such as commissioning a survey or using an industry recognised guide to estimate their rebuild cost.

Howard Posner, Chief Executive Officer, Halifax General Insurance said:

"With the recent property boom it is important that home-owners are clear about why they need buildings insurance and what sum they need to insure their property for. This will ensure that they have an adequate level of cover without paying excessive premiums.”

“Although insurers will normally update the estimated rebuild cost using the House Rebuilding Cost Index, it is the responsibility of the home owner to make sure this figure is correct and accurate. However, with Halifax Home Insurance you don’t need to worry as our buildings and contents cover is unlimited so you will be covered for the full rebuild cost whatever."

You can work out the rebuild cost of your property using guidelines issued by experts such as the Association of British Insurers or use a surveyor to prepare a professional assessment but it is recommended that you update this at least every five years.

It is also important that you inform your insurer if you make structural changes or additions to the house, to ensure your cover is kept up to date. Nearly a third of those surveyed by Halifax General Insurance had not informed their insurer of major changes made to their property meaning they were potentially under-insured.