Most landlords assume they’re fully covered. But in reality, many rental properties in the UK are underinsured — and that can be a very expensive problem.
If your property is underinsured, your insurer may only pay out a proportion of your claim, leaving you to cover the rest. And the worst part? Many landlords don’t even realise they’re underinsured until it’s too late.
The good news: you can check your cover in just 10 minutes. Here’s how:
What Does “Underinsured” Mean?
Underinsurance happens when the sum insured on your policy (the maximum your insurer will pay) is less than the true rebuild value of your property.
Example:
- Rebuild cost: £300,000
- Policy cover: £200,000
- Claim: £100,000
- Payout: only £66,666 (because your cover is 1/3 too low)
This is known as the “average clause”, and it’s a nasty surprise for landlords who only realise when making a claim.
3 Common Reasons Landlords Are Underinsured
- Outdated Rebuild Values
Property costs rise over time. If you set your rebuild cost years ago and never updated it, chances are your figure is now too low.
- Renovations & Upgrades
Added an extension, loft conversion, or new kitchen? Unless you updated your insurer, your cover may no longer reflect the true value.
- Guesswork Instead of Professional Valuations
Too many landlords “guesstimate” their rebuild costs. Insurers base payouts on facts, not guesses.
How to Check If You’re Underinsured (10-Minute Method)
- Check Your Current Policy → Look at the “sum insured” figure.
- Find Your Rebuild Cost → Use the free calculator from the Building Cost Information Service (BCIS), or review a recent surveyor’s valuation.
- Compare the Two → If your sum insured is lower than the rebuild cost, you’re underinsured.
- Factor in Recent Changes → Consider any renovations or rising construction costs.
- Contact Your Insurer/Broker → Adjust your policy before it’s too late.
Why It Matters More in 2025
Construction costs, labour shortages, and inflation mean rebuild costs have risen sharply in the past few years.
That means even landlords who thought they were safe may now be underinsured without realising.
Final Thoughts
Being underinsured is like having half an umbrella in a storm — it looks like cover, but it won’t actually protect you when you need it most.
Take 10 minutes today to check your sums insured against your property’s true rebuild cost. It could save you tens of thousands of pounds if the worst happens.
At NetRent Insurance Services, we help landlords assess their cover and secure policies that provide genuine protection.
Call us today on 01352 721300