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How to avoid underinsuring your home

If you want your home and all its contents to be fully covered, it’s vital the valuations you give your insurance provider are as accurate as possible. Keeping valuations low might keep your costs down, but it can also leave you underinsured and cost you thousands if you need to claim.

If you want your home and all its contents to be fully covered, it’s vital the valuations you give your insurance provider are as accurate as possible. Keeping valuations low might keep your costs down, but it can also leave you underinsured and cost you thousands if you need to claim.

Written by
Anna McEntee
Home, pet and travel insurance expert
Last Updated
26 FEBRUARY 2025
4 min read
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60-second summary

Want a quick overview of how to avoid underinsurance? Here’s what you need to know:

  • Carry out a full inventory of your home before taking out home insurance to get an accurate valuation.
  • When calculating your contents, work out the cost of replacing items with new equivalents.
  • Valuable items may need extra cover, especially if they’re worth more than £1,500.
  • Don’t fall foul of the ‘average clause’ rule, which could leave you seriously out of pocket.
  • Regularly review your cover to make sure it’s up to date.
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What is underinsurance?

Underinsurance is when the amount you’re insured for isn’t enough to cover the cost of repairing or replacing your property or possessions.

Lots of people underinsure their homes accidentally – often by not giving enough thought to the information they give their insurance provider. Others do it deliberately, to get a cheaper home insurance quote. Either way, if you underinsure your home, you could end up out of pocket if you ever need to claim.

It can be tricky to estimate the value of your home’s building and contents though. In fact, a 2024 survey by RebuildCostASSESSMENT.com shows that 76% of UK properties are underinsured.

What are the consequences of underinsuring your home?

Being underinsured can have serious repercussions. If you need to make a claim, the payout may not cover the full cost of repairs, rebuilding or replacing, leaving you to make up the shortfall.

Insurance providers can also apply what’s known as the ‘average clause’ rule. If this is written into your policy, it allows them to only pay a percentage of your claim.

Average clause example

Take a property with contents valued at £50,000 but insured for only £40,000 – it’s underinsured by 20%.

If a fire caused £60,000 of damage, your insurance provider could reduce the claim payout by 20%. This means you’d only get £48,000 from your provider, leaving you with a £12,000 bill to foot yourself.

If a fire caused £20,000 worth of damage, your insurance provider could reduce the claim payout by 20%. This means you’d only get £16,000 from your provider, leaving you with a £4,000 bill to foot yourself.

How do I work out the value of my contents?

To work out the true value of your contents, go through each room and write a list of what’s in it. Don’t just include the furniture and visible items. Think about the contents of your cupboards, wardrobes and drawers too. And don’t forget the contents of your garage and shed, if they’re included in your policy.

The average home has contents worth £52,000. That sounds like a lot, but it’s easy to forget items like carpets, curtains, light fittings, bedlinen and towels. Not to mention your kitchen equipment, books, toys, clothes and shoes. Just think about how much it would cost to replace every item you and your family members own.

To find out more, read our guide to accurately estimating the value of your home contents. Plus, you can use our handy contents calculator when you get a quote from us.

How do I work out how much buildings insurance I need?

For buildings insurance, you need to make sure your home is covered for its rebuild cost – not its market value.

You can work this out using the rebuild cost calculator provided by The Building Cost Information Service (BCIS) of the Royal Institution of Chartered Surveyors (RICS). Or we can help you calculate your rebuild cost using the BCIS service when you compare buildings insurance quotes with us.

If you’ve carried out home improvements, such as building an extension or converting an attic, you may need to increase your sum insured. This is the maximum amount your insurance will pay out.

Underinsuring your valuables

Finding out you’re underinsured when you make a claim can be upsetting. Follow these tips to make sure you don’t get caught out:

  • Add up the value of your contents room by room to get an accurate inventory. Remember to include items in your loft, garage and shed.
  • Work out how much it would cost to replace items now, not what you originally paid for them. Most policies offer ‘new for old’ cover.
  • If you own any valuables that are worth more than your provider’s single item limit, you’ll need to list these separately on your policy for an extra fee.
  • Consider getting a professional valuation of precious items such as jewellery, artwork and musical instruments that could be expensive to replace.
  • Think about whether you want to cover items you carry around with you when you're out and about. You can usually add personal possessions cover to your policy for an extra cost.
  • Regularly review your cover to make sure it’s up to date. The value of jewellery, for example, may well rise over time, while recently bought items should also be included.

Getting help with a valuation

Insuring your home and its contents for the full value is vital, so you can be confident that any claim you make will be paid in full.

If you’re not sure whether you’ve valued your possessions or home’s rebuild costs correctly, get in touch with your insurance provider. They’ll be able to guide you to help make sure you have the right level of cover.

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Anna McEntee – Home, travel and pet insurance expert

Anna’s all about delivering fantastic insurance products at a great price. Value is the most important thing for Anna, as she cuts through the jargon and finds what’s most important and worth your hard-earned money.

Learn more about Anna

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