New building rules could leave thousands underinsured overnight

Last month, we warned that energy-efficiency upgrades were quietly driving up rebuild costs and widening the underinsurance gap. Now, new figures, highlighted by the Building Cost Information Service (BCIS), show that the risk is about to get more widespread and more urgent.

BCIS has reported a surge in buildings insurance complaints, many linked to underinsurance. In the last quarter of 2024/25 alone, there were 1,740 complaints, with around 40% upheld. The root cause is all too familiar: rebuild valuations that are out of date, often based on market value rather than the true cost of reinstating a property.

And that true cost is only going one way – up.

The rebuild cost shock

Under new Future Homes and Buildings standards, any property that has to be rebuilt – whether after a fire, flood, or other major loss – must meet enhanced environmental and efficiency requirements, not the outdated specifications it may have been built to decades ago.

That means high-performance insulation, low-carbon heating, improved ventilation, and specialist building materials. Good for the planet but undeniably more expensive.

If a building is insured for its old rebuild cost, the payout may fall tens of thousands of pounds short of what’s needed to meet the legal requirements for a modern rebuild.

This isn’t a hypothetical risk. We’re already seeing it happen as energy-efficient retrofits become more common. The new Future Homes and Building Standards will only accelerate the trend.

Property owners who have recently upgraded their heating system or insulation may enjoy lower bills and a reduced carbon footprint, but those changes can also push their rebuild value far beyond their current sum insured. If disaster strikes, they could face a significant shortfall.

It’s a scenario we’ve highlighted before, and BCIS data shows it’s not going away.

Brokers: time to get ahead of the headlines

For brokers, the warning signs are clear. Now is the time to:

• Identify clients with properties that have been upgraded or will be affected by the new standards.

• Arrange a Rebuild Cost Assessment to ensure sums insured are accurate and up to date.

• Remind clients that insurance is about rebuild cost, not market value.

  
  

If rebuild valuations remain a one-off tick box, these new building rules could turn thousands of “fully insured” properties into costly cautionary tales overnight.

Want to understand more about how energy-efficient retrofits are impacting rebuild costs, and what you can do to keep cover levels accurate?

Read our full Energy Efficient Properties and Rebuild Costs guide here