Under-Insurance Check Calculator
Check whether index-linking has kept your buildings sum insured level with rebuild cost inflation, and what a claim would be reduced to.
💼 Are you a real estate agent or broker? Send this calculator to your buyers on your own branded listing page — every enquiry comes straight to your WhatsApp. Create free agent page →Buildings policies index-link the sum insured each year, and the index used frequently lags actual construction cost inflation. After several years of divergence, a policy that looks fully maintained can be covering only three quarters of what rebuilding would cost.
The consequence is not a capped payout but a proportionally reduced one. Most policies apply average, so a shortfall in cover reduces every claim by the same percentage, including small ones.
The calculation
The true rebuild cost is the original sum compounded at construction inflation. The insured amount is the same sum compounded at whatever the policy index-links by. The ratio between them is the proportion of any claim you would actually receive where average applies.
Worked example
A 380,000 sum insured set six years ago, with rebuild costs rising 7% a year, means the true rebuild cost is now about 570,278. If the policy index-linked at only 4%, the sum insured is around 480,822 — a shortfall of roughly 89,456, covering just 84.3% of the rebuild. A 50,000 claim would settle at about 42,157.
Reassess rather than relying on the index
Index-linking is a convenience, not a valuation. A fresh rebuild cost assessment every three to five years, and after any extension or major work, is what keeps the sum insured connected to reality. It is also cheap compared with a proportionally reduced claim.
Turn a calculation into an enquiry
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Create your free property pageFrequently asked questions
What is the principle of average?
Where the sum insured is less than the full rebuild cost, the insurer reduces every claim in the same proportion. Being insured for 80% of the rebuild cost can mean receiving 80% of a partial claim, not just being capped at the sum insured.
Does index-linking not solve this?
Only if the index matches actual construction inflation, which it often does not, particularly in periods when materials and labour rise sharply. Index-linking slows the drift rather than preventing it.
When should I get a new assessment?
Every three to five years, and immediately after an extension, loft conversion or significant upgrade. Any change to the building changes what it costs to rebuild, and the policy will not know unless you tell it.