The Underinsurance Gap in UK Blocks of Flats

A worked example of how blocks of flats drift below the cost of rebuilding them, who pays when a claim is cut, and what managing agents, building owners and residents can do before it happens.

Buildings insuranceAverage clauseInsurance Act 2015Fair presentation

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Key takeaway

Found at renewal, underinsurance is a correction to a schedule. Found at claim stage, it can mean five-figure bills for leaseholders and complaints or negligence claims for whoever arranged the cover.

7 in 10UK properties insured for less than their rebuild cost (2025)

6 in 10blocks of flats with declared values set too low before appraisal

£12,500per flat: the shortfall in an illustrative £900k claim

The challenge

Seven in ten UK properties are insured for less than it would cost to rebuild them. In a block of flats, an out-of-date valuation or an incomplete picture of the building's risk can see a claim reduced and the shortfall passed to leaseholders.

The solution

A current reinstatement valuation, backed by a live and evidenced record of the building: a Complitas Building Safety Management Pack and CompliScore rating that brokers and insurers can rely on.

Key findings

Across almost 44,000 rebuild cost assessments in 2025, only 7% of properties were insured accurately.
Residential rebuild costs rose 4.9% in the year to January 2026, so index-linked figures keep falling behind.
Undisclosed defects can reduce a claim further under the Insurance Act 2015.