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7 August 2025How to Avoid Underinsurance on Your UK Property
A Step-by-Step Guide For Property Owners
Why Underinsured Home Insurance Is a Growing Concern
Imagine suffering major damage to your home or rental property - only to find your insurance payout falls tens of thousands short. It’s a nightmare scenario, but one that thousands of homeowners, landlords, and business property owners across the UK face every year.
Why? Because they were unknowingly underinsured. From rebuild costs that don’t reflect current inflation to overlooked renovations and contents undervaluations, underinsured home insurance is a financial risk hiding in plain sight.
It Can Happen to Anyone - But It Doesn't Have To
The good news is that underinsurance is preventable. With the right steps - and a bit of guidance - you can make sure your property is fully protected before the worst happens. In this guide, we’ll break down what underinsurance is, why it happens, and how to prevent it.
We’ll also explain how a professional rebuild cost assessment can help you stay covered and confident, no matter what. Whether you’re a homeowner, landlord, or business owner, read on to make sure you’re not leaving anything to chance.
Why Are So Many Properties Underinsured?
Market Value vs Rebuild Cost
One of the biggest causes of underinsurance is assuming your property insurance should reflect your market value. Not true. Market value includes land, location and desirability - none of which are relevant if your home needs to be rebuilt.
Underestimating Contents Value
It’s easy to overlook things like soft furnishings, gifts, tech gadgets or attic storage. But when you need to replace everything, the total cost can be eye-watering. If your sum insured is too low, you could receive a lot less than expected.
Rising Costs & Inflation
Building costs in the UK have surged in recent years due to supply issues and inflation. If your policy hasn’t been updated to reflect this, you could be underinsured without even realising.
Renovations and Upgrades
Extended the kitchen? Added a loft conversion? These improvements can significantly increase rebuild costs - yet many homeowners don’t inform their insurer.
The "Average Clause" Catch
Most UK property policies include this clause: if you’re underinsured, the insurer reduces the payout in line with the underinsurance level. For example, 70% coverage means 30% of your claim may not be paid.
Real Risks of Being Underinsured
- Reduced Claim Payouts: The average clause means claims are scaled down. If you're 60% insured, you'll only get 60% of any payout.
- Claims Denial: In serious cases of underinsurance, insurers may void or reject parts of your claim.
- Major Financial Impact: Imagine being £50k-£100k short during a rebuild. Such a gap can put homeowners and landlords under significant financial stress.
- Longer Recovery Time: If your claim doesn’t cover the full cost of repairs or replacement, delays and compromises in rebuilding are almost inevitable.
- Stress and Disruption: Underinsurance often leads to drawn-out disputes with insurers, legal headaches, and months - if not years - of upheaval.
How to Prevent Underinsurance
1. Get a Proper Rebuild Cost Assessment
Use a professional service that bases valuations on BCIS data and RICS standards. This ensures you're getting a realistic figure that insurers trust.
2. Review Contents Thoroughly
Go room by room and price replacement values as if you were buying new. Don’t forget garage items, garden furniture or high-value personal possessions.
3. Annual Policy Reviews
Every year, check your policy and update it to reflect changes in value, inflation, and any renovations.
4. Notify Insurers of Changes
Any upgrade or extension should trigger a review. Even seemingly small changes can affect your rebuild cost significantly.
5. Understand Policy Limits
Review your documents for single-item limits or exclusions that may reduce your underinsurance coverage unexpectedly.
6. Speak to a Professional
Insurance brokers or rebuild cost consultants can help guide you through what to include and how to make sure your property is properly insured.
Example: A Costly Oversight
"James", a landlord in the Midlands, insured a terraced house for £200,000 based on market value. After a fire caused £80,000 in damage, the rebuild assessment found it should have been insured for £300,000. His insurer applied the average clause and paid only £53,000 - leaving James to cover £27,000 from his own pocket.
A simple rebuild cost assessment could have saved him thousands.
Who Should Be Paying Attention?
- Homeowners: Whether you live in a flat or detached home, you need accurate coverage to avoid nasty surprises.
- Landlords: Managing multiple properties? Underinsurance across a portfolio can multiply risk exponentially.
- Business Property Owners: Offices, warehouses, and mixed-use spaces often have complex rebuild costs - and insurers expect precision.
How Exactum Helps Prevent Underinsurance
At Exactum.co.uk, we specialise in professional rebuild cost assessments for homeowners, landlords and business owners across the UK. Our team delivers fast, RICS-compliant, BCIS-backed reports to ensure you're insured for the right amount.
With Exactum, you get:
- Fast desktop or site-based reports
- Accurate rebuild valuations based on real data
- RICS-regulated standards trusted by insurers
- Bespoke advice for property portfolios, brokers and landlords
- Reports ready to submit to your insurer within days
Whether you're managing one property or many, our rebuild cost assessments help ensure you're not underinsured, not overpaying, and always protected.
The Smart Solution: Rebuild Cost Assessments from Exactum
Underinsurance Is a Risk You Can’t Afford to Take
It’s not just a “nice to have" - getting your property properly insured is essential. In the UK, underinsurance affects thousands of properties every year. Most owners only realise it after a disaster strikes. And by then? It's too late. Fortunately, there's a way to get ahead of the problem.
You Don’t Have to Guess
Insurance policies demand accuracy, not assumptions. That’s why more property owners, brokers, and landlords are turning to rebuild cost assessments to remove the guesswork. With a proper valuation, you're protecting your investment and ensuring your insurance pays out fully when you need it most.
Get It Right the First Time
Underinsured Home Insurance doesn’t have to be your reality. With the right information, regular reviews, and a trusted rebuild cost assessment from Exactum, you can avoid underinsurance for good.
Ready to protect what matters? Request your rebuild cost assessment today and insure with confidence.
Call 0800 028 0695 and talk to our friendly team today.
