It is the full rebuilding cost of the property and it is the responsibility of the insurer properly calculate this figure. For a freehold property, the insurer will be the freehold owner. However, for a leased property, the responsibility still lies with the freehold property owner and not the leaseholder, unless specific alternative arrangements are in place.

Most lenders insist you have Building Insurance to protect their investment, and it should cover the total cost of rebuilding the property in the event of any damage.

A Building Insurance cost is not an "open market" valuation and they often bear no relationship to each other.

The "open market value" depends upon the supply and demand factors of the market for property, together with local factors and personal needs.

When you originally purchased the house, and a mortgage valuation was carried out, the surveyor would also have calculated a Building Insurance cost, often known as a "rebuild cost."

In subsequent years, your insurers may recalculate this rebuild cost by simply applying a percentage in an effort to keep pace with current building materials and labour costs. Over time this may become inaccurate and you could find yourself under-insured or over-insured. Of course, your insurers may not adjust the original rebuild figure at all!

In any event, we would advise you have a Building Insurance calculation carried out annually.

Normally you don't, as this is best done for you by a Chartered Surveyor. To find out about recalculating your Building Insurance cost call 01525 37 6000 or click here.

If you want to attempt to do it yourself, you could visit the Building Costs Information Service (BCIS) website at www.bcis.co.uk for building cost information.