Fiducia TogetherInsurance excess and underinsurance
Paying part of a claim yourself, and the penalty for insuring for too little.
Please note: This page explains what a term means. It is general information, not legal, financial, tax or investment advice, and it does not know anything about your business. Before you sign, file or commit to anything, check it with an accountant, a solicitor, or the official guidance we link to.
What it means
An excess is the amount you bear on each claim. Underinsurance is insuring an asset or a business for less than its true value.
Why it matters
Where the sum insured is below the true value, the average clause reduces the claim proportionately. Insure a £200,000 stock for £100,000 and a £40,000 claim pays £20,000.
What it looks like in practice
Review sums insured annually, especially after cost inflation. Rebuild cost is not market value, and it has risen sharply.\n\nBusiness interruption sums are based on gross profit as the policy defines it, not turnover.
What to watch out for
Index-linking that has not kept up. Underinsurance is widespread and is only discovered at the claim.
Where to get proper advice
A broker and, for property, a reinstatement cost assessment.
Where to read more
Last reviewed 2026-08-28 by Fiducia Together · Next review due 2027-08-28
Please note: This page explains what a term means. It is general information, not legal, financial, tax or investment advice, and it does not know anything about your business. Before you sign, file or commit to anything, check it with an accountant, a solicitor, or the official guidance we link to.