Buildings insurance - Keeping your insurance up to date

To avoid policyholders being under-insured as a result of inflation, insurers ‘index-link’ the sum insured to keep pace with rising (or falling) rebuilding costs as measured by the House Rebuilding Cost Index. The sum insured moves in line with the index during the year but does not affect how much you pay in premiums until the renewal date, when the premium is recalculated to take account of the effect of inflation on the sum insured.
Although index-linking should guard against the insured rebuilding cost not keeping pace with inflation, it will not take into account any increases in the rebuilding costs as a result of improvements you made to your home such as building an extension or installing double glazing. Nor will it take into account price increases for non-standard building materials such as stone. If you have made major alterations which could affect the rebuilding cost, tell your insurer, otherwise you may find that you are under-insured. You should also tell your insurer about anything that might reduce the building cost of your home, for example if you have knocked down a redundant garage. Whatever you do to your home, it makes sense to review the cost of rebuilding it every few years.