Is Your Home Still Properly Insured?

Underinsurance is becoming an increasingly common problem for homeowners, making it more important than ever to check that your property is properly protected.

Concerning statistics highlight the underinsurance problem

Recent data shows that in 2025, 70% of UK properties were insured for less than their true rebuild cost. In fact, the average home is only covered for 66% of the amount required to completely rebuild it. This means that, in the event of a major claim, many policyholders could face reduced payouts, leaving them to cover a significant shortfall themselves.While this marks a slight improvement compared with 2020-2022 (when underinsurance affected as many as 80% of UK properties), underinsurance is still a prevalent issue

The ‘average clause’ explained

A rise in extreme weather has highlighted the risks of leaving your property underinsured. Homeowners have made claims for fires, flooding and escape of water, only to discover that their cover was insufficient. In these circumstances, an insurer can apply the ‘average clause’ - this reduces the claim settlement in proportion to the level of the policyholder’s underinsurance. For example, if a property is covered for 66% of its true rebuild cost, the insurer might only cover 66% of the claim.

Misinformation causes underinsurance

One of the main causes of underinsurance is a lack of understanding about how to calculate rebuild costs. According to the research, many policyholders mistakenly insure their homes based on the property’s market value, which reflects what their home would sell for. However, the rebuild cost is the price of reconstructing the whole property from scratch. Therefore, the amount could be significantly more as it must include materials, labour, debris removal and more.

Review regularly

Outdated valuations are another key driver of underinsurance. Building and labour costs have risen in recent years, so rebuild costs are estimated to be 35% to 40% higher than in 2020. If your policy has not been reviewed recently, your cover might not reflect the true cost of reconstructing your home today.

Take action now

Reviewing your home insurance doesn’t have to be complicated. Check your rebuild cost and ensure your policy reflects any home improvements to help ensure you have the right level of cover. If you’re unsure whether your insurance is still adequate, now is the time to seek professional advice. Get in touch to make sure you’re fully protected and avoid an unwelcome surprise if you ever need to make a claim.

As with all insurance policies, conditions and exclusions will apply.

Sources:

https://www.covermagazine.co.uk/news/4524648/protection-ranks-lowest-importance-homebuyers

https://www.insurancebusinessmag.com/uk/news/property-insurance/report-majority-of-uk-properties-were-underinsured-in-2025-560941.aspx