As inflation continues to impact the UK economy, Ageas UK’s Chief Underwriting Officer Tom Quirke reflects on how and why home underinsurance continues to be prominent.
Posted on 17th March 2026 Tagged in Insured Insights
As inflation continues to impact the UK economy, Ageas UK’s Chief Underwriting Officer Tom Quirke reflects on how and why home underinsurance continues to be prominent. |
Underinsurance is when the amount your customer is insured for is less than the true cost of repairing, replacing, or rebuilding what they’re covered for. Simply put, this means that if a loss occurs, the insurer may only pay a proportion of the claim because the cover doesn’t reflect the real, up to date value.
According to data from over 43,000 property assessments, RebuildCostASSESSMENT reported 70% of properties in the UK are underinsured.
On average, these underinsured properties are covered for just 67% of their true rebuild cost.
Much like the housing market itself, insurance is not static. However, while the market is based on property value, the cover and price of insurance is specifically based on the rebuild value.
The cost of materials and tradespeople required for rebuilding fluctuates over time. The rebuild value of a property now is not the same as it would have been in the past, which means that the corresponding insurance policy your customer might have, may no longer offer sufficient cover.
We know how easy it is for policy limits to become outdated, which is why regular reviews are so important. As insurers, we have a responsibility to raise awareness with you, our trusted partners, and support your customers to ensure that they have the appropriate level of insurance in place.
Why is home underinsurance happening?
There are several reasons why underinsurance is still a problem, but a primary issue is that many homes aren’t insured for their true rebuild cost.
Following home improvements such as a loft conversion or an extension, the rebuild value of a property changes, and we know that customers aren’t always aware that they need to update their insurance policy accordingly.
As inflation increases construction costs, so too does the amount of money it takes to undergo a repair. Over time, the rebuild and repair of a property will increase in cost and, as a result, the level of cover provided by the insurance policy may well be insufficient.
Similarly, and particularly with the increase in the costs of certain precious metals, the value of high-value contents items like jewellery or electronics can fluctuate, and many policyholders do not review whether their level of cover reflects the current valuations.
To help mitigate these risks, prompt or support your customers to review their rebuild and contents valuations annually, encourage disclosure of any home improvements, and highlight the impact of inflation on repair and replacement costs so that cover levels remain accurate and up to date.
Replacing now determined by value today
As insurers and brokers, we need to help customers reframe how they view insurance. When claiming for loss or damage caused to their home or for their broken watch screen, the insurance covers the current value and, due to numerous factors, this value changes over time.
We need to help customers think about things not in the context of when they bought them, but in the context of what they would have to pay now to replace them.
The fluctuating value of an item of jewellery will affect insurance cover, as does the changing value of building materials and subsequently the cost of a home repair.
The impact of inflation is not in customers’ control, but if the worst were to happen, it is important to make sure that your customer’s insurance policy covers the cost of rebuilding their home, and replacing their contents in today’s economic landscape.
What can we do?
Underinsurance does not benefit the insurance industry, and it also does not benefit your customers. It is important that all your customers have the right level of insurance to cover a claim should the worst happen today.
Raising awareness is key in tackling underinsurance.
As insurers, we need your support to encourage your customers to reassess the cover they need every time they buy or renew their insurance.
As underwriting becomes increasingly data-driven, insurers must leverage our technical capabilities to better assess property rebuild values and risks, as well as looking at how we can use data to alert customers who we think may need to review their cover.
We are always looking at how we can better serve you and your customers, and we continue to align and work with governing bodies on coverage standards.
To help your customers value their home and contents, you can talk through or share our handy guide.
While it doesn’t take significant property features into account or cover listed properties, the Building Cost Information Service’s house rebuilding cost calculator can also help your customers to calculate rebuild costs.
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