How common is underinsurance?
Nine out of ten properties in the UK are insured for the wrong amount.
According to the latest figures from RebuildCostASSESSMENT.com – the insurance industry’s most reliable benchmark for property sums insured – around nine out of every 10 properties in the UK are insured for the wrong amount.
On average, underinsured properties were covered for just 66% of what they should have been in the period September 2021 to August 2022. Compared to 68% the previous year, showing how the buildings underinsurance gap is widening in the UK. The underinsurance gap is biggest among buildings insured for up to £500,000, which are on average only covered for 51% of their rebuild cost.
Buildings insured for more than £2 million are less underinsured, but are still covered on average for only 70% of reliable rebuild cost. And when it comes to UK commercial properties, the estimated underinsurance total is an eyewatering £375 billion. This level of underinsurance means that, in the event of a claim being made for serious damage, the amount paid out is often significantly less than the property is actually worth.
There are also instances of overinsurance too but they are less common –13% of buildings assessed were covered for too much, on average by 132%.
These are truly staggering statistics that point to a UK wide problem which can only be resolved by landlords realising the risk they’re running and making sure their buildings are insured for the right amount.
Given the huge rise in the cost of buildings materials, as well as associated costs such as professional fees, it isn’t really surprising that the underinsurance gap is widening. These figures do paint a worrying picture for many property owners, who are exposed to a significant shortfall in claims payments should they suffer a loss. Let’s be clear, UK buildings are on average covered for just two thirds of what they should be, according to our extensive data.
