How to Make Sure you are not Overinsured or Underinsured

How to Make Sure you are not Overinsured or Underinsured

As inflation hits, it's never been more important to check the rebuild cost of your property.* assesses more than 2,000 commercial properties every year, from shops and hotels to offices and factories. Their data shows that more than 85% are not insured for the right amount**.

The implications of not having the right level of protection in place could be devastating. This is why we are again encouraging you to rightsize your insurance by checking your property rebuild cost.

What are the risks of not having your property covered for the right amount?

There are two main risks when it comes to not being correctly insured. The first is over-insurance.

This affects almost 20% of commercial properties and is where you're actually covered for more than your property is valued at.

It's certainly better to be overinsured than under (more of that below), but it does mean you're likely to be paying more for your insurance every year than you need to be.

The other risk is under-insurance and this can have far more devastating consequences. Most insurance policies have an "Average Clause".

Here's how an Average Clause works:

Let's say your property is insured for £1,000,000, but the actual cost to rebuild should be £2,000,000.

Here, any insurance claim you make for the property could be reduced by 50%. In this example you would need to find £1,000,000 of your own money to cover the cost of rebuilding your property following a major incident, such as a fire that completely destroys your building.

In the far more likely scenario of partial damage you may need to claim, say, £500,000 but as you are only insuring the property for half of what it is worth you will only be able to claim half of the loss, in this case £250,000.

What is the solution to the risks of not having your property covered for the right amount?

It is widely encouraged that you should undertake a full property rebuild valuation at least every three years.

However, in times such as now, where the UK is facing the highest levels of inflation seen in over 40 years, coupled with supply chain challenges causing materials to treble or quadruple in price, there's never been a more important time to review your cover and ensure it is sufficient to protect you should the worse happen.


Underinsurance is still incredibly common (whether in times of crisis or not). Learn more about it, its dangers and how to avoid it by visiting our underinsurance hub.

We are passionate about tackling the unprecedented levels of underinsurance in the UK: watch our video on how to avoid this for your business

About the author

Mark Brannon Cert CII, commercial, sales, broking and client director

Mark Brannon Cert CII is a respected industry leader with over 17 years’ industry experience in a variety of roles within the business insurance sector. He works across a wide spectrum of insurance product and policy development, delivery and optimisation for clients, including claims, insurer relationships, marketing and communications, and risk management.

Find out more about the threat of underinsurance

Read more underinsurance articles

For more information or for a full review of your insurance needs, please see our insurance specialisms, contact your usual Towergate Insurance Brokers adviser or email

The information contained in this bulletin is based on sources that we believe are reliable and should be understood as general risk management and insurance information only. It is not intended to be taken as advice with respect to any specific or individual situation and cannot be relied upon as such. If you wish to discuss your specific requirements, please do not hesitate to contact your usual Towergate Insurance Brokers adviser.