Underinsured: the silent home risk

Why so many UK homes are underinsured — and how to check yours isn't.

13 May 2026 4 min read

Most homeowners assume their building and contents insurance has them covered. In reality, the Association of British Insurers estimates a significant share of UK homes are underinsured — sometimes by tens of thousands of pounds.

Building sums insured aren''t the same as house value

Buildings cover should reflect the rebuild cost, not the market price. Online tools from the BCIS (Building Cost Information Service) give a quick estimate, and most insurers will accept their figures.

Contents grow over time

Most people underestimate the value of their belongings. Add up replacement costs for clothes, electronics, kitchen equipment, soft furnishings and personal items — it adds up faster than you''d think.

The "average clause" trap

If you''re underinsured, insurers can apply an "average clause" — paying out a smaller proportion even on smaller claims. It''s the most common cause of disappointing settlements.

Review every year

Set a calendar reminder to review sums insured annually, and after any home improvements or major purchases.

Frequently asked questions

How do I work out my buildings sum insured?+

Use the BCIS rebuild cost calculator or commission a professional reinstatement valuation. The figure should reflect rebuild cost, not market value.

What is the 'average clause' on insurance?+

If you're underinsured, the insurer can reduce any claim payout in proportion to the underinsurance — even on small claims.

How often should I review my home insurance?+

At least once a year, and after any significant home improvement or major purchase.

Suggested next steps

Quote and compare with adviser support.

General Insurance

Home, landlord and contents cover.

This article is for general information only and does not constitute regulated financial advice. For guidance tailored to your circumstances, please speak to a Red Kite adviser.