Valuation And Rebuild Cost Awareness Gaps Create A Serious Underinsurance Issue

More than three-quarters of brokers (76%) identify either incorrect property valuations or lack of awareness about reinstatement costs as the main driver of underinsurance in the non-standard market, according to new research from Prestige Underwriting.

Together, these factors were cited substantially more often than customers cutting cover to save money, which accounted for 24%.

Over half (54%) believe underinsurance risk is rising as a consequence for non-standard household customers, with over a third (35%) believing it remains at a high level.

The findings highlight the need for insurers, MGAs and brokers to review how rebuild values are established and explained at renewal, particularly for homes requiring specialist assessment.

The survey found that brokers most commonly identified non-standard construction (65%), listed or heritage homes (56%) and unoccupied or probate properties (56%) as the property types most vulnerable to underinsurance. Thatch properties (26%) and homes with subsidence history (18%) were also identified as areas of concern. Flood-exposed homes were cited by 15%.

These property types can require more detailed assessment because specialist materials, conservation requirements, access issues and the condition of the property can all affect the true cost of reinstatement.

The ABI/BCIS House Rebuilding Cost Index rose by 4.4% in the year to October 2026¹. And more recent ABI figures² also underline the scale of household claims costs - the average home insurance payout exceeded a record £10,000 in the third quarter of 2026.

Alison Williams, Managing Director at Prestige Underwriting, said:

“Underinsurance is a serious issue, but the research shows the causes are not limited to customers cutting cover because of cost pressures. Taken together, incorrect property valuations and lack of awareness about reinstatement costs account for more than three-quarters of brokers’ responses. That makes accurate assessment and clear explanation of rebuild values central to tackling the problem.

“Brokers have an important role to play because they can ask the right questions, explain why rebuild values matter and guide customers towards appropriate cover. That should include checking how and when a rebuild estimate was obtained and whether changes to the property mean it needs reassessment. For specialist insurers and MGAs, the priority is to support brokers with clear underwriting guidance, access to underwriters and the expertise needed for more complex homes.”