Why do you need buildings insurance?
Buildings insurance covers you from damage or loss due to things like fires, flooding, storms, and theft.
You are not legally obliged to take out buildings insurance, but if you have a mortgage, your lender can insist that you have buildings insurance.
This will ensure you are covered for rebuild costs if your home is destroyed, for example in a fire. Even if you don’t have a mortgage and own your home outright, home insurance will protect you financially in the event of burglary, fire or other damage.
Underinsurance occurs when a home is insured for less than the replacement value. This could occur by simply electing for the incorrect value of your home. However this can also occur due to inflation where costs rise overtime and the rebuild cost of your home increases. Please read more details on Underinsurance here.