The new craze for DIY means that more and more UK homeowners are extending their properties and adding such things as loft conversions rather than moving to a new home. But according to research, the ‘up-not-out' generation may find that their insurance cover no longer fits their new-look properties.

The widening rungs of the property ladder, where property price inflation has persistently outstripped building cost inflation, means that the cost of extending a home has become significantly cheaper compared with moving out. In many UK cities, the difference moving or extending can be up to £30,000 when legal costs, stamp-duty and removal costs are taken into account. However, homeowners who decide to stay put and extend their home often fail to review their cover, and sometimes fail to make sure that their home insurance cover has kept pace with the changes they have made.

Homeowners who have not taken changes into account may have a problem. An examination of some of largest Insurance companies shows that only a small number of building insurance policies have the 'peace of mind' which unlimited sum insured offers. Some buildings insurance policies only cover a specific sum insured and, as such, they may not cover all of the claim in the event of total loss.

Many people extending their property are required to notify their insurer not just of improvements that add either additional bedrooms or garages to the property, but also kitchen extensions, living room extensions or conservatories. There may well be a premium increase in light of the increased cover.