New data from RebuildCostASSESSMENT.com has revealed that properties with a sum insured of less than £500,000 are generally covered for just over half the amount they should be.
On average, buildings insured for less than half a million are covered for just 55% of their true rebuild cost. This is in contrast with data for properties insured for more than £2m, which on average are covered for 72% of their rebuild cost.
“Let’s be honest, this isn’t really a good situation all round,” said RebuildCostASSESSMENT.com director Will Molland MCIOB AssocRICS. “What we’ve seen from our assessments over the past 12 months across all levels of sums insured is a 32% shortfall in cover, a percentage point up on the previous year. However, those at the lower value end of the scale are proportionately more underinsured.”
For properties that are overinsured, which affects around 14% of buildings, an equally interesting picture emerges. Those with a sum insured of less than 500k are on average overinsured by 20%, compared to 31% for those currently covered for more than £2m.
“So, what we’re seeing is lower value buildings being a lot more out when it comes to underinsurance, but not so far off when getting their sum insured too high,” said Will. “Either way, the level of inaccuracy overall is quite staggering. 94% of buildings in the UK are insured for the wrong amount, with 80% underinsured and 14% overinsured.”
The data is based on more than 14,000 assessments of reinstatement costs by RebuildCostASSESSMENT.com between September 2020 and August 2021.
This month, RebuildCostASSESSMENT.com has updated its annual industry infographic, which highlights various data around under and overinsurance levels in the UK. A copy of our latest infographic can be downloaded below.