A significant number of consumers could be placing themselves under financial pressure when it comes to purchasing building cover, a new study shows.

In research carried out by Confused, it was revealed that just under a third (30 per cent) of Britons are overestimating the cost of rebuilds. According to the price comparison website, one in ten people believe that rebuild costs and the original sum of money paid for a home are the same. Meanwhile, some 20 per cent think that rebuilds are more expensive than the initial worth of the building. It was suggested that such a lack of awareness could prove to be “extremely costly” for such people, when shopping for buildings insurance cover.

Research from the firm also pointed out that a semi-detached house in the north-east of England, which is worth 180,000 pounds, has a garage and measures 742 sq ft, would cost 79,700 pounds to rebuild. Such costs would rise to 85,700 pounds if the property was located in the south-east of the country.

Following on from such misjudgments in regards to the cost of insurance and work on property, it may be possible that homeowners have to pay more money than they had previously anticipated. This might have an impact upon their ability to manage other demands on their spending. Such areas could well include loans, household bills, credit and store cards and mortgage repayments.

Commenting on the figures, Debra Williams, managing director for Confused, said: “The fact that one in three consumers consider rebuild cost to be the same as purchase price is unprecedented and could see them paying over the odds year-on-year. Being financially savvy certainly pays; not only does it mean that consumers can gauge whether they are paying an acceptable amount for insurance but they are more likely to shop around for lucrative deals if they feel that they are being sold short.”

Ms Williams went on to report that when browsing the market for buildings cover, using a price comparison site can help homeowners avoid getting a policy which will unnecessarily put them out of pocket. However, the managing director pointed out that it is for consumers to have “basic financial knowledge” should they look to secure the most competitive policies on offer.

For those Britons who are looking for an effective way to carry out rebuilds or various other improvements to their home, taking out a home improvement loan could be recommended. By getting such a loan, borrowers may be able to find that they can afford the cost of materials and hiring qualified tradespeople to carry out such work quickly and effectively. In addition, the financial assistance that such a homeowner loan provides could allow consumers to purchase comprehensive buildings cover.

Furthermore, a loan might be of particular assistance to consumers who are looking to meet the cost of repairs after finding their home has been damaged by extreme weather. A recent study by the Royal Institution of Chartered Surveyors’ Buildings Cost Information Service showed the average cost of cutting and removing a large tree is 1,050 pounds, with the typical price of replacing a set of six roof tiles or slates standing at 350 pounds.

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