Landlords often focus on finding a competitive premium — but one of the biggest financial risks in property ownership comes not from overpaying, but from being underinsured.
Underinsurance occurs when the amount your property is insured for is less than the true cost of rebuilding or repairing it after a loss. It’s more common than most landlords realise — and when it strikes, it can leave you with a significant shortfall at the worst possible time.
What Does Underinsurance Really Mean?
Imagine your property is insured for £200,000, but the actual rebuild cost is £250,000. That means you’re 20% underinsured.
Now imagine a fire causes £50,000 worth of damage. You might expect your insurer to pay the full £50,000 — but because you’re only covered for 80% of the property’s true value, the insurer may only pay 80% of your claim.
That’s just £40,000, leaving you to find the remaining £10,000 yourself.
This principle, known as “the average clause”, is applied by many insurers and can affect both buildings and contents cover.
Underinsurance doesn’t just reduce your payout — it can delay the entire claims process while the insurer reassesses valuations and applies adjustments.
Why So Many Landlords Are at Risk
Property rebuild costs have risen sharply in recent years, driven by:
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Rising material and labour costs
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Energy price increases affecting rebuild estimates
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Supply chain delays and planning restrictions
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Inflationary pressures across the construction industry
If your property hasn’t been professionally revalued within the past few years, there’s a real chance your insurance sum is outdated.
Many landlords renew their policy automatically, assuming the insured value remains accurate. Unfortunately, this is where the risk creeps in — especially for older properties, listed buildings, or those that have undergone significant refurbishment.
The True Cost of Being Underinsured
Being underinsured doesn’t just mean a smaller payout — it can also mean:
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Increased downtime while you source additional funds
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Loss of rent during extended repair periods
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Potential mortgage or lender breaches if you’re found to have inadequate cover
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Stress and financial strain that could easily have been avoided
The irony is that ensuring full coverage usually costs very little more — but the protection it provides is invaluable.
How NetRent Helps You Stay Properly Protected
At NetRent, we don’t just issue policies — we make sure your insurance truly reflects your property’s real-world value.
Our specialists:
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Help landlords reassess their rebuild cost before renewal.
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Advise on inflation-linked or index-linked policies that automatically adjust values.
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Review your existing cover to identify gaps in protection.
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Ensure that loss of rent and alternative accommodation clauses are properly calculated.
This means that when something goes wrong, you’re covered — fully and fairly.
Let’s Review Your Cover Before Renewal
Don’t wait until a claim to discover you were underinsured. Our property insurance experts can help you review your policy and make sure every pound of your investment is properly protected.
📞 Call us today on 01352 721300
📧 Email: insurance@netrent.co.uk
Whether you’re a landlord, letting agent, or local authority housing officer, NetRent Insurance provides professional, knowledgeable support to ensure your properties are fully covered — and your peace of mind is secure.