The value of your policy should equal the cost of rebuilding your home, writes Laura Slattery

With daylight hours rapidly contracting into daylight minutes, homeowners retreat to their natural, well-insulated habitats and pray that their rusting central heating system survives another winter.

But before they batten down the hatches, a quick check to see if their home is correctly insured could save a few financial shivers later on.

Thanks to a higher risk of storm damage, flooding, burst pipes and burglaries, winter typically gives rise to more home insurance claims than any other season. An adequate insurance policy, with no surprise omissions, should hopefully lead to a glitch-free claim.

Many homeowners insure their properties for the wrong amount, and either run the risk of having to pay for the cost of damage themselves or end up forking out too high a premium because they have signed up for more cover than they actually need.

The problem centres on a common misunderstanding about home insurance. Many homeowners believe that the value of their policy should be the same as the market value of their home. But this figure is irrelevant, says Conor Hogan, president of the Society of Chartered Surveyors (SCS).

Instead, the "buildings insurance" component of a home insurance policy should be equal to the reinstatement value, which translates as the amount of money it would cost to rebuild the property completely in the event it is obliterated by a fire, a flood or any other hazard.

After years of booming property prices, this figure is usually considerably less than the market value of the home, meaning anyone who inadvertently bases their cover on market value will be paying an unnecessarily high premium.

On the other hand, a lot of homeowners underinsure their properties because they don't increase their cover in line with inflation and don't allow for the cost of replacing new extensions or improvements added since they originally took out their policy.

Every year the Society of Chartered Surveyors publishes an updated guide to how much it costs to rebuild standard houses per square metre. The new figures for 2006 are published in the table opposite.

To work out how much cover they need, homeowners should multiply the price per square metre by the floor area of their home. For example, a four-bedroom, semi-detached house in Cork has an area of around 120 square metres. According to the table, it will cost €1,537 per square metre to rebuild.

So, assuming there is nothing out of the ordinary about the property, it should be insured for around €185,000 (€1,537 x 120 = €184,440).

For those people still more familiar with thinking of property in terms of square feet, you need to multiply the square footage of the property by 0.0929.

Contents insurance is then added on - for apartment dwellers, this will actually be the only home insurance cover they need to purchase themselves, as they will be paying for block insurance through their annual management fees.

The SCS table of rebuilding costs is designed as a minimum base cost guide for owners of estate-type houses built since the 1960s only.

The guide excludes properties with more than two storeys or with basements or habitable attics, although the SCS does estimate that the total rebuilding cost for a single attached garage is around €15,000, while a double attached garage will cost just over €27,000 to rebuild.

But how do people who live in other styles of houses - such as one-off self-builds, townhouses and period houses - work out how much insurance they need?

"We tell people who approach us to get a chartered quantity surveyor, but very few people actually do," says Hogan.

Getting a proper survey done is nonetheless crucial. "If you take just a Georgian house, all of those houses have very individual designs. Some have very fine cornices, others not so fine. Some may be in a state of decay, others may not be. You couldn't apply a euro per square foot rule to it."

Meanwhile, owners of quaint but flammable thatched houses will find that not every insurance company will jump to take on the risk. And surveys by the financial regulator have shown that the premiums offered by the insurers who do quote thatched houses vary wildly.

Although the SCS figures allow for restoring a concrete path around the house, repairing a driveway and regrassing, it does not include the cost of restoring any outbuildings, patios or boundary walls, so this should be added on.

Several insurance companies have now moved to offer cover for modish additions like garden decking, as well as children's playhouses, outdoor hot tubs and other garden fittings, but homeowners who have spent the money installing such features should still examine their policy document to check the extent of this cover.

For example, will their wooden decking be covered in the event of a fire or just a storm? If an out-of-control barbecue was to blame, will their claim be successful?

Policy booklets are often a disappointing read, however. "Insurers are getting better at writing them, but it is not going to be an interesting novel," says Stuart Reid, director of general services at the Irish Brokers Association.

Brokers will wade through the policy terms and conditions on behalf of consumers and seek out the comprehensive cover many of them need, Reid adds.

"If you look at the inside of the houses being advertised in the property supplements, you will see that everything is done up to the nines and that's not the exception anymore," says Reid.

Anyone with better-than-average kitchen fittings, built-in wardrobes and finishes such as wooden floors should investigate that they have the sufficient cover to replace them should disaster strike.

It needn't be the storm of the century that does the damage. According to One Direct, the financial services subsidiary of An Post, a third of its home insurance claimants over a 12-month period made claims for "escape of liquids", which is a rather genteel way of saying that their washing machine, dishwasher or fridge leaked.

A couple of decades ago, this could have been easily mopped up from the non-absorbent kitchen tiles, with no need to get on the phone to your insurer.

But in these days of open-plan living spaces, a leaking kitchen appliance can cause significant damage to an expensive hardwood timber floor.

While the pattern of home insurance claims hasn't changed in recent years, the cost of repairing or replacing damaged items has increased for householders, One Direct notes.

"Electronic equipment like TVs and hi-fis and DVD players are the only things that have gone down in value - everything else has gone up," says Reid, who advises homeowners to wander from room to room and "roughly tot up what they estimate everything costs, then add a third on again".

Apart from buildings insurance and contents insurance, home insurance policies have a third dimension, known as "all risks", where items such as jewellery, cameras and electronic goods continue to be insured even when removed from the house.

"All risks" is an optional extra under most policies, however.

"You might be into photography and regularly take expensive photography equipment out of the house, for example. So it is a matter of getting the policy that covers your lifestyle," says Reid.

Even if homeowners aren't planning to lug swanky equipment past their front door, they may run into difficulties if they haven't specified to their insurer that they want their gear covered: most home contents policies contain a single item limit, meaning if something is worth more than this limit, they won't be covered for its full value.

Home insurance premiums have come down in recent years and more people are shopping around for cover, rather than just selecting the policy their mortgage lender offers them, says Reid. But price isn't everything. "If you go for the cheapest policy and it doesn't provide the cover you thought it would, it does create a very bad feeling."