The impact of underinsurance

More than 9 out of 10 UK buildings are insured for the wrong amount
83% of UK properties are underinsured. This can severely reduce the amount paid out following a property damage claim.
13% of UK properties are overinsured. If this is you, you’re paying more than you need to for your insurance.

NOT ENOUGH

We find that on average, underinsured buildings are covered for just 66% of the amount they should be.

TOO MUCH

While overinsured buildings are on average covered for 132% of the correct amount.

610,000*

The estimated number of high-value homes in Britain that are currently underinsured.

£375 billion**

The estimated underinsurance total for all UK commercial properties.
Every year Rebuild Cost Assessment share data with the insurance industry around the accuracy of building sums insured in the UK. These are their latest findings covering both residential and commercial properties.

Data derived from 26,861 Rebuild Cost Assessments completed between Sep ‘21 and Aug ‘22. *Estimate based on Zoopla data on UK homes with a market value exceeding £1m **Estimate based on British Property Federation (BPF) data on UK commercial real estate

How does this effect my property insurance?

If the reinstatement value of your property is £1,000,000 but you only take out insurance for £500,000 you are underinsuring your property by 50%. Most property insurance policies have a condition called the ‘Average Clause’, allowing the insurer to reduce settlement payments in the event of under insurance.

In this example, if you suffered a fire which caused £100,000 worth of damage, the insurer would only pay for half of the damage = £50,000

Contact your account manager to discuss your sums insured and ensure they’re adequate, and ask about our online reinstatement survey for £175. Mrs Loyd did just that and found she was one of the lucky ones in the 13% overinsured.

I am grateful to Brownhill’s for highlighting the benefit of having an RCA survey carried out online. The cost of the survey (£175.00) has saved me £182.18 on my premium. Thank you!

Mrs R.A. Loyd
Download: The Rise of Building Costs

020 8658 4334

info@brownhillgroup.co.uk

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