If one looks at it from the lenders point of view it actually makes sense. The lenders security on the mortgage is the property and its buildings. Should the buildings be destroyed by some catastrophe, they would be at considerable risk. Building cover includes things such as the toilets, interior fixtures, fitted kitchens and cupboards in a normal circumstance. Check the policy to insure you have covered all you need to.
Contents cover is fairly self explanatory.
This is cover for things like one's television, furniture, electrical appliances, carpets etc. The policy also normally provides a liability cover. Liability cover is where an individual may injure themselves on your property. This individual may have a claim against you. In certain instances this could be quite considerable.