The Importance of Having Enough Home Insurance


(And what happens if you DON’T have enough)

We’ve all been there; times are tough and you’re looking for a way to save some money on your outgoings.

So why shouldn’t you just take out less insurance?

All insurers have to adhere to the ‘Principles of Insurance’, which are a set of legal guidelines set out by the FCA. Part of these guidelines is called the ‘Condition of Average’, or underinsurance as it’s more commonly known. It’s worked out like this…

INSURED FOR (£)  /  VALUE (£)   X   LOSS  =  CLAIM PAID (£)

This means that in circumstances where the true value of the item is less than it’s been insured for and a claim is made, the pay-out is proportional to the amount of underinsurance.

But what does that actually mean for my home?

The easiest way to explain is using an example.

Let’s say my house is worth £200,000, but I decide to insure it for only £100,000. The next day, my house burns down, needing a complete rebuild. Because my house is underinsured by £100,000 (or 50%) I only receive 50% of the insured amount. So the pay-out I would receive is only £50,000.

under insured graphic


How to I make sure this doesn’t happen to me?

Most Home Insurance providers will, as standard, insure your property at more than the basic rebuild costs. For Policy Expert customers, this is usually between £500,000 and £1m. However, it’s important to be completely honest with your insurers to ensure that you don’t find yourself under-insured if you have to make a claim.

Policy Expert

Policy Expert is an online Home Insurance broker, dedicated to helping customers find the insurance policy that’s right for them. Our customers are at the heart of everything we do, so we have a team of experts with a real passion for making sure people get the cover that’s right for them. Policy Expert is driven by a desire to help you find not only the best value insurance, but the right insurance for your individual needs. For more information on claiming on your Home Insurance policy, speak to one of our experts on 0203 014 9300 or email

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The views expressed here are solely those of the author and do not necessarily reflect the views of Policy Expert.