This is often a condition of the lender giving you a mortgage so, in the event of a disaster, it can be repaired or rebuilt. If you don’t have buildings insurance and your house burns down, the lender will have no collateral for its loan, so will call it in.
In which case, not only will you be homeless, but you’ll still owe the lender the value of the mortgage. Because so many lenders have suffered this, they now insist you provide proof the property is insured.
The lender will ask you to cover the property for the rebuild cost, which should be noted in the survey.
In most areas of the country this will be considerably less than the market value of the property. Most insurers cover you for the rebuild cost, although some will cover you for the market value. Check which one your policy will pay out on.