Property owners warned about financial implications of underinsuring buildings

BUSINESS owners and farmers across the UK are being warned about the potentially devastating financial consequences of not insuring their properties for the correct amount as rebuild costs continue to rise.

With the price of materials increasing due to disruptions in the supply chain and pressures of inflation, a growing number of people are now unaware that their buildings may cost significantly more to rebuild than what they are actually insured for.

The issue of underinsurance is having a significant impact across the UK with many business owners losing out on pay-outs due to their insurance policy being undervalued.

In 2022, leading insurer Aviva, in its latest Risk Insights Report, estimated that half of SMEs in the UK are underinsured, and 40 per cent of buildings covered in policies were underinsured by 20 per cent.

Chris Clement, the Commercial Director for H&H Insurance Brokers, said: “Many businesses have existing insurance policies in place for their buildings which they believe covers them for a full pay-out if anything does go wrong.

“But with the way the prices of building materials have risen, the actual cost of rebuilding after any sort of damage may have doubled or even trebled in some instances, so what they are finding is that the value of the building has risen and the sum the insurer is paying out doesn’t cover the full amount of the rebuild.

“This is hitting a lot of businesses across the UK hard in their pocket and can be potentially devastating to businesses but, by raising awareness of the problem, we hope to make this dilemma a very rare one for people across the country.

“Seeing your building destroyed by a fire or partially damaged by strong winds is traumatic enough and learning that you will only get a certain percentage of the rebuild costs through the insurance pay-out is a stress you can really do without.

“Making sure you are correctly covered is paramount and it’s why your broker must ensure every detail of the policy is accounted for to avoid this disappointment.”

The most common reason for underinsurance was cited as a failure of conducting regular valuations.

Chris said: “When renewing policies, I think it is essential for your broker to visit the property and analyse the items which they’re looking to cover so they can get a more realistic and accurate picture of the level of cover required.

“During Covid when site visits weren’t allowed, many fell into the habit of carrying out reviews over the phone but I recommend that this type of review is kept to a minimum.”

H&H Insurance Brokers is the UK’s Independent Broker of the Year for 2022 and one of the UK’s leading independent insurance brokers operating across the North of England, the Scottish Borders and Wales, with nearly 40 years of experience protecting businesses across various sectors. 

For more information, call (01228) 406290 or visit


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