Switching broker · Cover gaps · 2026

How to tell if your business is underinsured

Underinsurance is the gap you don't see — until a claim, when the insurer can cut your payout to match. Here's how to spot it first.

Part of: When to switch business insurance broker

In short

Underinsurance is widespread and usually invisible until something goes wrong. If your sums insured are too low, insurers can apply "average" and reduce a claim payout in proportion — so a 40% shortfall can mean a 40% smaller cheque. The common causes: rebuild costs and stock that have risen but sums insured that haven't, business interruption periods set too short, and limits left unchanged for years. A broker re-rates the figures so the cover would actually respond in full.

Warning signs you may be underinsured

Your buildings sum insured hasn't been reviewed against today's rebuild cost (not market value).
Stock, contents or equipment have grown but the limits haven't moved.
Your business interruption indemnity period is 12 months when recovery would realistically take longer.
Turnover or wage roll has risen well beyond what the policy assumes.
The whole policy has simply rolled over for years without a valuation or review.

How a broker fixes it

Re-checks sums insured against rebuild costs and current values.
Sets a realistic business interruption period for how long you'd actually take to recover.
Removes the guesswork that triggers the "average" clause at claim time.
Reviews it each year so it stays right as the business grows.

Being properly insured isn't about paying more — it's about the cover paying out in full when you need it.

Frequently asked

What does "average" mean on an insurance policy?

If your sum insured is lower than the true value, insurers can reduce the payout in the same proportion. Insure something for 60% of its value and a claim may be cut by around 40%.

Should buildings be insured for market value or rebuild cost?

Rebuild cost, the cost to reconstruct the property, which can be very different from market value. Getting this wrong is one of the most common causes of underinsurance.

How often should sums insured be reviewed?

At least annually, and whenever the business changes materially: more stock, a refit, higher turnover, or new premises.

Can a broker check if I'm underinsured?

Yes. A broker reviews your sums insured and indemnity periods against reality and flags where a claim wouldn't pay out in full.

Not sure your cover would pay out in full?

Send us your current schedule and a named Apex broker will check your sums insured and tell you plainly where you're exposed.

Get a cover check → Request a callback

Apex Insurance Brokers is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice.