What is underinsurance?

Underinsurance means that the level of insurance you have isn’t enough. This can be for your home or the things in it.

If you do not have the right level of contents or buildings insurance, you might have to pay more yourself when you claim.

You may be underinsured if you:

  • underestimate how much your home and contents are worth in your quote
  • buy new items and don’t update your policy to include them.

Having the right level of insurance is key to make sure you are not left out of pocket if you need to claim.

What happens if you’re underinsured?

Your level of home insurance cover will state how much you can claim for certain items. If the item is worth more than the limit on your policy, you might have to pay the rest yourself. 

Your mortgage lender will expect you to have buildings insurance that covers the cost of rebuilding your home from scratch. If you rent, you won't need buildings insurance - your landlord will handle that.

You will also need to keep your policy updated to ensure it covers new items you buy. If you buy a new TV, but don’t update your policy, you may not be able to claim for the full amount if it’s stolen.

If you're making changes to your home, before you start the work, check your policy to see if you need to tell your insurer.

What’s the difference between being underinsured and uninsured?


You have insurance, but it doesn’t cover the value of the item or items you are insuring.


You don’t have any insurance.


In both cases, you will have to pay more money than if you were properly insured. If you aren’t insured, you’ll have to buy a new item if it’s stolen. If you are underinsured, you’ll have to pay more towards your claim to replace it.

To make sure you are fully covered in the event of fire, flood or theft, you need to have enough insurance to cover all your costs.

What level of buildings insurance do I need?

When you buy buildings insurance, it’s important to get the right level of cover.

If anything happens to your home, you want your insurance to cover the full rebuild cost. This may be different from the current market value of your property as it includes the work to clear and rebuild your home.

Work out the rough cost to rebuild your home from scratch and try not to miss out anything. Protect your home with Home Insurance Select, and you're covered for the full rebuild cost of your home.

If you're making changes to your home, before you start the work, check your policy to see if you need to tell your insurer.

What level of contents insurance do I need?

Contents insurance protects the things you own that make your house your home.

When you fill out your quote, try to add up the total cost of all your belongings. Remember to include:

  • clothes
  • furniture that is not a permanent fixture or fitting
  • electronics
  • curtains and carpets
  • ornaments and trinkets
  • artwork.

Your contents insurance might have a limit on how much you can claim for certain items. Jewellery and expensive gadgets are common items with claim limits. You may need to name these items specifically on your policy to cover them for their full value.

Add up the total cost of your things when you buy something new like a TV and update your cover if you need to. If you don’t, you might find not all your items are covered if you need to make a claim.

How to value your home for buildings insurance

Giving an accurate value for your home and contents is key to avoid being underinsured.

Here are some of the best ways to ensure you calculate the value of your buildings accurately.

How to estimate the value of your home

To make sure your insurance covers the entire cost of rebuilding your home, you need to calculate its full value. This isn't the market value of your home, which factors in the popularity of your local area. Instead, it includes the cost of all the materials and labour needed to build your home from scratch.

There are several ways you can calculate the value of your home.

Use an online rebuild cost calculator

Many online calculators will help you work out the cost to rebuild your home.

To start with, you will need to work out the size of your home in square metres. Measure the length and width of the ground floor, then multiply both figures together to do this. 

You can then double the value for your ground floor for your first floor if it is an identical size and shape. If your upper floors are different, you will need to measure them separately.

Use a Chartered Surveyor

If you live in an historic or listed building, it might be best to hire a Chartered Surveyor. They will assess your home by taking measurements.

Then they use this to create a Rebuilding Cost Assessment. You can use this to understand how much you’ll need to insure your home for.

Bedroom rated insurance

Some insurers calculate the rebuild cost for you based on the number of bedrooms you have. This means that you don't have to work out the rebuild cost of your home.

Leasehold flats

If you live in a leasehold flat or maisonette, it is likely that the freeholder will already have buildings insurance.

Halifax Home Insurance Select underwritten by Lloyds Bank General Insurance Limited.

Halifax is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.