What Is Overinsurance?
- Amy Lillington
- 4 days ago
- 2 min read
When it comes to buildings insurance, most people are aware of the risks of underinsurance. But what many property owners don't realise is that overinsurance can also be a costly mistake.
If you're paying for more insurance than you actually need, you could be spending more on your premiums without receiving any additional benefit.
Here's what overinsurance means and how to check whether your property is insured for the right amount.
What Is Overinsurance?
Overinsurance occurs when your property is insured for more than it would cost to rebuild from scratch.
For example, if your property's rebuild cost is £500,000 but your buildings insurance is based on £600,000, your property is overinsured.
While this might seem like extra peace of mind, it doesn't mean you'll receive a larger payout if you need to make a claim.
Why Does Overinsurance Matter?
Buildings insurance is designed to cover the cost of rebuilding your property, not the amount it's insured for.
If your property were completely destroyed, your insurer would only pay the actual rebuild cost. Any amount you've insured above that won't increase your claim settlement.
The result? You may have been paying higher insurance premiums than necessary without receiving any additional protection.
How Common Is Overinsurance?
Recent data from RebuildCostASSESSMENT.com shows that 23% of UK properties are overinsured, compared with 14% two years ago.
On average, these properties are insured for around 129% of their true rebuild cost, meaning many property owners are paying more than they need to for their buildings insurance.
These statistics were relevant at the time of recording. For the most up-to-date information, please visit RebuildCostASSESSMENT.com.
How Can You Check If You're Overinsured?
If you're unsure whether your buildings insurance reflects the correct rebuild cost, it's worth reviewing your policy.
A good place to start is the Rebuild Checker. Using data from more than 150,000 UK property assessments, the tool indicates whether properties within your postcode area are likely to be:
Underinsured
Overinsured
Insured for approximately the right amount
While it doesn't provide an individual rebuild cost, it can help you decide whether it's time to review your insurance cover or arrange a professional rebuild cost assessment.
Getting the Right Level of Cover
Whether your property is underinsured or overinsured, the goal is the same: to ensure your buildings insurance reflects the true cost of rebuilding your property.
An accurate rebuild cost assessment helps you avoid paying too much for your insurance while giving you confidence that you have the right level of protection should the unexpected happen.
Watch Amy explain it all
Still have questions? Watch Amy break it down in under 2-Minute Tuesday
Got a Question? Ask Amy
Do you have more questions about rebuild costs or property insurance? Or perhaps something fun and light-hearted?
Email AskAmy@RebuildCostASSESSMENT.com, and Amy might feature your question in the next 2-Minute Tuesday.
Don't Risk Underinsurance – Get Assessed Today
With accurate rebuild cost assessments from RebuildCostASSESSMENT.com, you can be confident your home is properly protected.
Need help? Contact us for a quick and easy desktop assessment today.
