Advice centre

Underinsurance explained

Being underinsured can reduce your settlement, sometimes severely. Here's how it works and how to protect yourself.

Victorian terraced houses on a street in Oxford
What it means

What is underinsurance?

You're underinsured when your sum insured is less than it would really cost to rebuild your property or replace its contents. Your insurer can then reduce your settlement, sometimes severely, and in cases of gross underinsurance it can reject the claim altogether.

It's often unintentional. Many people insure their property for what it's worth on the market rather than what it would cost to rebuild.

It isn't always as clear-cut as an insurer may suggest. If you're worried about underinsurance, talk to us as early as possible.

Protect yourself

How to check you're properly insured

A few checks at renewal can save a lot of trouble if you ever need to claim.

Help with refused or reduced claims
  • Insure for the rebuild costYour buildings sum insured should reflect what it would cost to rebuild, not the market value.
  • Include everythingOutbuildings, garages, walls and extensions all add to the rebuild cost.
  • Value your contents properlyGo room by room. Most people underestimate the cost of replacing everything.
  • List high-value itemsJewellery, art and other valuables above the single-item limit usually need to be named.
  • Review every yearBuilding costs and your belongings change. Check your sums insured at each renewal.
  • Get professional adviceFor larger or older properties, a surveyor's rebuild valuation is worth considering.
Keep reading

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Loss adjuster vs loss assessorWho they work for, what they do and why it pays to have your own representation. Questions your loss adjuster may askWhat a loss adjuster will ask you, why they ask it and how to answer. Insurance claim glossaryPlain-English definitions of the terms you'll hear during a claim.

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