Under Insurance

With Halloween being this week Laura our General Insurance advisor has taken the time to look at the hair-raising topic of under-insurance and the nightmares it can bring with it. She will even tell you about a real-life horror story.

For most of us when the unexpected happens making a claim is straightforward. We point you in the direction of your insurance provider and help you fill out your forms, the insurance company will pay a visit and they pay-out on your claim restoring normality to your life.

Unfortunately for others, their claim turns into a Halloween nightmare. Which is caused by the monster we call “under-insurance”.

Under-insurance is inadequate insurance held by a policyholder which may result in serious losses to the policy holder.

If you have had a quote from myself recently in relation to your home insurance, you will see that I go into more detail in relation to this monster. This is because it’s the biggest problem that policyholders face. As a policyholder you wouldn’t make mistakes in relation to your policy on purpose, its often the problem that you don’t really know how much things are worth. The nightmare then occurs when you try to make a claim, and by this point its too late.

In some cases when you put in a claim and are found to be under-insured the insurer will refuse to pay a penny. However often they use the averaging strategy. This is when a proportion of the claim is paid, based on the value the policyholder is covered for and the premium they pay.


A client’s property is incorrectly insured for £100,000 when the actual cost of rebuild is £200,000. The cover in place is insufficient and the insurance company reduce the settlement by 50%. Repairs to the property cost £20,000 but as the customer was 50% under-insured they only receive a £10,000 settlement.


Real Life Horror Stories

A couple bought a policy covering £50,000 worth of contents but when their home was flooded by a burst pipe their insurer would only pay out half the amount as the couple had not disclosed the full value of their contents. They didn’t know anything about under-insurance and believed that the insurance company would pay the full £50,000 which would have been enough to restore their contents.


We make sure that you are fully aware of the level of policy you are taking out. If there is any doubt about your level of contents we have a handy tool we can give you that takes you around your house letting you input your estimations for each item in your home. We can even send you over a content’s checklist.


Nearly all our clients that I talk to have no idea about under-insurance and the nightmares it can cause. The best advice I can give is, don’t take the risk with something so important. You work hard to buy your homes and fill them with all the things you love. With Christmas around the corner it’s a great time to review your policies and make sure that you have a policy with the correct cover. The policies we have also give you an extra 10% increase in cover at this time of year as we know that with Christmas, comes presents – meaning your home has a few more items than normal.

Need help? Call or email us and we'll be happy to help with your enquiry.