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Almost 3/4 of commercial buildings with sums insured of £500k or less are underinsured.

Which commercial buildings are most likely to be underinsured?

September 2017

According to new data from Analysis of the findings of almost 4,000 rebuild cost assessments carried out by Insurtech start up also revealed that while underinsurance becomes less likely as sums insured increase, the overall picture is one of widespread inadequacy of cover.

It's been generally recognised for some time that on average buildings are between 30% and 40% underinsured, but with the fresh insights real time data analysis provides hotspots can be identified.

For example, underinsurance is more likely when the current sums insured are relatively low. 73% of buildings with current sums insured of up to £500,000 are underinsured, as are 71% of buildings with sums insured of between £500,000 and £1m. Almost three quarters!

Percentages improve as sums insured go up but there is still widespread underinsurance, and once over £2m things actually begin to deteriorate slightly again.

Here are the complete findings:


The consequences of underinsurance can be massive. A minor shortfall will lead to a proportionate reduction in any claim for damage to the building but a major one for a serious flood or fire incident could be catastrophic. An owner of a £1m building, insured with a rebuild sum insured of £600k that has a £100,000 claim would need to find £40k at least in order to get the building back to what it was before. I say at least because an insurer could potentially walk away from a claim if they believed that the underinsurance was reckless or deliberate and any arguments about sums insured after the event mean that at best the business operating there can't trade or the loss of rent simply goes on longer.

We can't stress enough the importance of making sure that rebuilding sums insured are accurate and regularly checked and updated. We're not valuers but we can point you in the right direction and it doesn't mean an expensive valuation survey every time either. Stats like these suggest that around 60/70% of building owners reading this will have a problem should a claim occur. When was the last time you seriously considered whether your rebuilding sums insured are really accurate and current?

If you'd like any help or advice on property insurance, how insurers deal with underinsurance and what you can do to ensure that your policy responds to a claim how you would want it to, contact Johnstone Insurance brokers on 01724 872939.