Household Insurance: Is your cover still fit for purpose?
We regularly see homeowners assume their household insurance will automatically protect them in all situations. Unfortunately, this is not always the case. Changing rebuild costs, rising construction prices, and an increase in major home improvement projects mean many properties are now underinsured without the owners realising.
Household insurance should never be a ‘set and forget’ arrangement. It needs to be reviewed and updated to reflect both the true cost of rebuilding your home and any significant works being undertaken.
Understanding household insurance
Household insurance generally consists of two main elements:
- Buildings insurance, which covers the structure of your property, including walls, roofs, floors, and permanent fixtures.
- Contents insurance, which protects personal belongings such as furniture, electrical items, clothing, and valuables.
While buildings insurance is often a requirement of mortgage lenders, having a policy in place does not necessarily mean it remains appropriate or sufficient for your circumstances.
The risk of outdated rebuild values
One of the most common issues I encounter is properties being insured for an incorrect rebuild value.
What is a rebuild value?
The rebuild value is not the market value of your property. Instead, it represents the cost of completely rebuilding the home from the ground up. This includes:
- Demolition and site clearance
- Labour and building materials
- Professional fees, such as architects and surveyors
- Compliance with current building regulations
Why this matters more than ever
Over recent years, rebuild costs have increased considerably due to higher material prices, labour shortages, and evolving regulatory requirements. Many policies are still based on valuations calculated several years ago, leaving homeowners exposed.
If your property is underinsured, insurers may apply the average clause, meaning any claim payment could be reduced — even if the damage is only partial. This is a risk no homeowner should ignore.
Building Works and Insurance: A Common Oversight
Another area where we frequently see problems arise is during extensive building or refurbishment works. Many standard household insurance policies either limit or exclude cover while major works are taking place.
Examples of works that typically require insurer notification include:
- Structural alterations
- Extensions or loft conversions
- Major refurbishments
- Removal of load-bearing walls
If your insurer is not informed, your policy may be invalidated, leaving you exposed at a critical time.
Why supplementary insurance is often essential
When significant works are being carried out, additional or specialist insurance is often required to ensure adequate protection.
This may include:
- Contract works insurance, covering the new works and materials on site
- Public liability cover, protecting against injury or damage to third parties
- Non-negligence insurance, covering damage arising from nearby works
While contractors will usually have their own insurance, this does not always fully protect the homeowner. In the event of a dispute or unclear responsibility, relying solely on a contractor’s policy can leave dangerous gaps in cover.
When should you review your household insurance?
From my experience, your household insurance should be reviewed whenever:
- You are planning or undertaking building works
- Renovations or extensions have been completed
- Your rebuild value hasn’t been checked in several years
- Construction costs have significantly increased
A proactive review can prevent costly issues later and ensure your home remains fully protected.
As someone who works closely with residential properties every day, I cannot stress enough how important it is to ensure your household insurance remains accurate and appropriate. Outdated rebuild values and unreported building works are among the most common causes of underinsurance we see.
Your insurance should evolve alongside your property. Whether you are planning improvements, undertaking major works, or simply reviewing your cover after a period of time, taking professional advice and ensuring the right level of protection is in place can safeguard what is often your most valuable asset.
If you are unsure whether your current insurance is sufficient, or if you are planning building works and would like guidance on what cover may be required, I would encourage you to seek advice early. You are welcome to reach out to me directly for further advice and support.
Nichola Andrews
Director of Property Management
nichola@mountgrangeheritage.co.uk
