Are you underinsured?
More than 9 out of 10 UK buildings are insured for the wrong amount*
The subject of underinsurance is an increasingly hot topic within insurance. That’s because it is an industry wide issue and we’ve seen just how quickly these changes can happen overnight.
Whether it be political, social or economic factors, as a nation we have experienced a lot of change over the last few years. We’ve experienced complications arising from Brexit, Covid-19, the war in Ukraine and most recently, the Cost of Living Crisis, all of which have pushed many businesses into completely changing the way they provide services and trade.
You may look at this and wonder what has this got to do with underinsurance?
Let’s look at some of the costs that have dramatically risen in the last few years due to these circumstances.
Increased labour costs and wage inflation
Due to fewer qualified tradespeople being available, we are seeing that wages have risen. In 2023, The Federation of Master Builders members acknowledged that the shortage of skilled tradespeople has had an impact on their jobs. 12% of members reported the shortage has led to cancellation of jobs and nearly 59% of members reported a net increase in wages and salaries.**
Materials cost increases
In 2023, The Federation of Master Builders members also reported an upward trend in the prices they were charging for their services. Around 71% of these members reported a net increase in material costs.
Materials supply shortages (including stock, machinery and plant)
Furthermore, timber and plaster shortages continue to affect supply chains, delaying construction projects.
Inflation increases
It feels like every month we get more bad news around inflation. Recently it grew at its fastest rate in 30 years. Due to the uncertainty around inflation and pricing, some suppliers will now only hold their quotes for 24 hours.
This brings us to the question of, are you underinsured?
A recent study by RebuildCostASSESSMENT found that more than 9 out 10 UK building are insured for the wrong amount.**
81% of these buildings are underinsured, being covered for just 63% of the amount they should be. If they were to make a claim, this can severely reduce the amount paid out to them.
They also found that 14% of buildings were overinsured, paying and being covered for 122% of the amount they needed.
Breaking this down further by property type, 80% of commercial properties are underinsured and 15% are overinsured, while 82% of residential properties are underinsured and 13% are overinsured.
Properties most likely to be underinsured
- Sports centres/recreation centres
- Hospices
- Public houses, licensed premises/Hotels
- Nursing homes/ Care homes
- Golf clubhouses
- Vehicle showrooms
- Youth clubs/ Nursery schools
- Undertakers
- Retail warehouses
- Dentist surgeries
Are you aware of the consequences of being underinsured? Read our upcoming articles on how this can affect you, and what we can do to help.
At James and Lindsay, we pride ourselves on the personal service we offer. Our hands on approach means we get to know you personally, taking time with each individual policy. We work closely with a number of trusted insurers and have access to insurance solutions that may not be available elsewhere.
*Data taken from RebuildCostASSESSMENT.com 2023 Industry Infographic
Data derived from 29,000 Rebuild Cost Assessments completed as of 31st August 2023.
**Data taken from Federation of Master Builders State of Trade Survey Q3 2023.