4 top tips for avoiding underinsurance

Increased prices have not gone away.  Overall inflation remains at 3.8% – above the Bank of England’s 2% target and the resulting cost of products, materials and labour continues to make it more expensive to rebuild, repair or replace insured items. This could leave your business vulnerable if you don’t regularly review your insurance policies.

The Charterfields Insurance Gap Report 2025[1] compiled data from over 600 site inspections across the UK including manufacturing, food production, logistics and services and found that:

• 88% of properties surveyed were underinsured on buildings and civil works
• 35% had declared building values at less than half of the true reinstatement cost
• 77% of plant, equipment, and contents were underinsured
• 41% had declared values for these assets at under 50% of what it would cost to reinstate them.

[1] Mind the Gap: 2025 Underinsurance Report Reveals Major Risk to Businesses? | Charterfields

The following tips may help you avoid the perils of underinsurance:

• Check rebuilding costs. According to Rebuild Cost Assessment^[2], only 7% of UK properties are insured accurately, with 70% of properties underinsured and 23% overinsured.  It’s therefore vital to make sure your property is insured for the correct and current rebuild value. This can be achieved by having a professional rebuilding valuation carried out.
• Assess indemnity periods. Following catastrophic losses, it’s easy to underestimate how long it could take to restart operations and regain usual productivity. Supply chain disruptions may well impede repair works increasing the length of time before you can return to business as usual. Assessing indemnity periods regularly and extending them as necessary can help your business cope with potentially disastrous delays. We generally recommend 24 or 36 months for the indemnity period.
• Review your insurance cover frequently. A business rarely remains static; gaining or losing employees, updating processes and adopting new technology all give rise to potential risks. As such, it’s important to ensure your insurance cover remains adequate after any changes, and new purchases should be added to policies.

[2] Infographic 2025: UK property insurance crisis revealed

By taking the time to make sure that your insurance and risk management programme provides the appropriate level of cover, you can face tough times knowing your business is adequately covered should the worst happen.

Talk to us to find out how we can help.