Risk of underinsurance grows with inflation

By Phoebe Winter, October 12th 2022

Earlier this summer, inflation in the UK reached a 40-year high of 9.4% and as a result many economists predict the UK to have the highest rate of inflation of the G7 nations for the next two years.

Many factors have caused the rapid rise, from the ongoing energy crisis and war in Ukraine, increased post-pandemic demand, supply chain bottlenecks and labour shortages. These factors plus many more are expanding the risks businesses are facing.  

Inflation and underinsurance

Inflation driving costs up means that many businesses’ assets will have a significantly higher value and replacement costs from just a few months ago. This has increased the risks of many being underinsured, whether it be rebuilding premises or replacing stock, if you do not have enough coverage due to rising costs you could be liable for the shortfall.

Gareth Williams, Director at Rushton International comments “property damage claims are where we are coming across underinsurance the most. The Office of National Statistics predicted a 7-8% increase in material prices this year, however by June the average increase was already at 23%. Combined with a shortage of materials internationally and labour in the UK, the risk of being underinsured has never been higher.

Mitigate the risk

Out-of-date valuations in a volatile market aren’t a risk any business wants to deal with. Given the financial impacts that can follow underinsurance, it is important to address the risk in advance of the insurance renewal date. A more robust and accurate review of the reinstatement values can be required from an onsite survey.

How can we help?

As a regulated RICS firm of Chartered Surveyors, our standard model is to offer an onsite assessment and a further extension of service covering 2 years desktop updates, following which we would recommend a return to site. More about our insurance valuation services can be found here.

To discuss your valuation requirements or for further information, please contact a member of our team on 020 7702 3723 or email enquiry@rushton.co.uk.


About Rushton International

Rushton International is an independent and impartial asset valuation and advisory firm. We specialise in the valuation of plant, equipment and buildings for insurance purposes. With our team of qualified and accredited valuers, we have the experience, qualifications and expertise to value any asset, anywhere in the world.

Read more

Contact Us

    Insurance Valuations

    Insurance Valuations

    Rushton International is a tried and trusted name in insurance valuations. Our valuation advice assists clients, risk managers and their brokers to accurately and confidentially set sums insured for the fixed assets in their insurance programme.

    Financial Valuation

    Financial Valuations

    We work with our clients to deliver comprehensive valuation advice for financial reporting purposes. By using our sector experience and market knowledge we are able to assist with the valuation of plant, equipment and other specialised assets in order to estimate fair value for GAAP and IFRS financial reporting purposes.

    Asset Management

    Asset Management

    Rushton International provides asset management solutions that are tailored to our clients’ needs. Our work ranges from asset verification, preparation of computerised asset registers and updating asset registers.

    Rushton News

    Energy’s change in direction heightens risk of underinsurance

    From taking steps to move away from fossil fuels or just trying to keep up with energy demands hindered by the war, the energy market is changing. The need for change has never been more crucial and companies are working faster than ever to adapt. Looking to the future Centrica recently...

    INSURANCE VALUATIONS March 23rd 2022

    Why regular revaluations are important

    There are several reasons as to why regular revaluations are essential for any property owner or insurance manager and we have listed the key factors below: Ensuring the Correct Sums Insured remain up to date Ensuring the Correct Sums Insured remain up to date is both a cost consideration...

    ENERGY, NEWS January 27th 2022

    Energy prices and the Construction industry

    Following an unprecedented year of uncertainty due to COVID-19, the construction industry experienced another setback in material shortages during Q4 of 2021 due to a surge in energy prices. The Energy Crisis There have been several factors recorded over the past few months that have...

    INSURANCE VALUATIONS November 8th 2021

    Why valuations matter

    Valuations and regular re-valuations are key and should be at the forefront of the mind of any prudent property owner or insurance manager. Ultimately, exposure to underinsurance would mean funding replacement costs following a loss from other sources.  A reserve that many businesses will not...

    NEWS September 1st 2021

    A COVID-19 update on the Construction industry

    Following a significant number of lockdowns worldwide due to the COVID-19 pandemic, the construction industry has experienced a substantial amount of uncertainty due to a surge in costs, material shortages and more latterly exceptional levels of demand. By continuing to monitor the everchanging...