According to the price comparison website Uswitch, around 76% of homes in the UK may currently be underinsured. With the average home insurance claim reaching £6,200, according to the Association of British Insurers, even a small discrepancy in policy details can lead to thousands of pounds in unrecovered losses.
The issue came into focus after one Hertfordshire homeowner was left with a substantial bill following a burst pipe. Her experience highlights how easily misunderstandings about property details can affect an insurance payout.
Incorrect Property Details Can Reduce Insurance Payouts
Michelle Hynes, 44, from Sawbridgeworth in Hertfordshire, discovered the consequences of underinsurance after returning from a family holiday to find her home severely damaged. A pipe had frozen and burst in the attic while the family were away, flooding the bungalow and causing the ceiling to collapse.
The damage occurred shortly after Hynes returned from a two-week trip to Disneyland Florida with her husband Adam and their two children, Leah, 15, and Ethan, 17. Speaking about the moment they arrived home, she described the shock of opening the door after a long overnight flight. “We’d had a night flight and were quite jet-lagged, so we were all excited to get into our own beds,” she said. “So when we opened the door we were just in shock and couldn’t believe our eyes.”
When she contacted her insurer, Aviva, to make a claim, she was informed that the policy information did not accurately reflect the property’s size. According to the insurer, the house had been declared as having four bedrooms, when it was assessed as having five.
Because of this discrepancy, the insurer said the property had been underinsured. As a result, only 83% of the claim’s value would be paid, leaving the family with an £11,000 shortfall. Hynes said she believed the property had been correctly described when she purchased the policy through the comparison website Confused.com.
“I said it’s a four-bedroom property with two other rooms; a dressing room and a study,” she explained, adding that she later obtained a letter from her estate agent stating the property was not a five-bedroom home.
Underinsurance Affects a Majority of UK Homes
Cases like this are not unusual, according to consumer experts. Underinsurance often occurs when policyholders underestimate their property’s rebuild value or enter incorrect information about the number of bedrooms or the overall size of the home.
According to Uswitch, more than three quarters of UK homes may be insured for less than their true rebuild cost. Insurers commonly use the number of bedrooms as a rough indicator of property size when calculating premiums and coverage levels. Rob Lilley-Jones, a money expert at Which?, said misunderstandings about policy details can have costly consequences when claims are made.
“If you’re in any doubt about what your policy will cover, it’s best to have a chat with your insurer to ensure you’re both on the same page, as misunderstandings can be costly further down the line,” he said.
Insurers say providing accurate information when purchasing a policy is essential. An Aviva spokesperson stated that incorrect details supplied at the outset of a policy can affect the level of cover available when a claim is made. According to the company, failing to provide the correct information may leave customers underinsured and facing a financial shortfall if they need to claim. As this case shows, even relatively small differences in property descriptions can translate into thousands of pounds in unexpected costs.
