The Halifax has defended the way its new computer system calculates premiums for buildings insurance, writes Mick Cooper. The mortgage lender has come under fire from the Consumers' Association for not listing the sum insured on quotations showing the rebuilding cost for a property.

The high street lender, which is one of the biggest with 2.5 million borrowers, said new rating factors such as the age, type and location of a property, means it can price insurance more accurately without requiring a figure for rebuilding costs. The cover it offers is in fact unlimited so consumers do not have to worry about being under-insured.

But the Consumers' Association considers it ‘essential' that consumers are told the exact amount of cover they are being offered.

Senior Consumers' Association researcher and insurance specialist Philip Telford said that without knowing how much cover they were being quoted, consumers would find it difficult to make comparisons with other insurers to get the best deal.

“In our experience people do not want unlimited cover,” he said. “Otherwise they are paying for cover they do not need. The basic purpose of insurance is to obtain limited cover.”

The Halifax claims its new system is fairer because it allows it to tailor the cost of insurance on a case-by-case basis. “The reason we don't give the sum insured is because it is not relevant to unlimited cover, said spokesman Ian Beggs. “Nor is it compulsory for borrowers to choose our insurance if they have a mortgage with us.”