Energy retrofits are widening the underinsurance gap – and brokers have a role to play in closing it, asserts Sharon Masters, surveyor and technical lead at RebuildCostASSESSMENT.com
A friend of mine recently spent close to £25,000 retrofitting their home with new insulation, triple glazing and an air-source heat pump. They were thrilled, looking forward to lower bills, a warmer house and a smaller carbon footprint. However, when I asked if they’d told their insurer or checked their buildings cover, the answer was a blank stare.
That reaction is something I see all too often. As more UK property owners embrace greener upgrades, there’s a growing disconnect between improvements being made and the protection in place if the worst happens.
With energy prices still high and net-zero deadlines getting closer, energy-efficiency improvements are catching on. Last year, a record 260,000 installations of heat pumps, solar tech or battery systems were certified, up 7% on 2023. Over 1.4 million UK homes are now fitted with solar panels.
This all represents a big win for sustainability and is great news. However, there’s a side effect that often gets missed.
There’s always a cost
All those improvements come with a cost: a rebuild cost. And if that cost isn’t reflected in the insurance policy, the property could be significantly underinsured. The upgrades are real and so is the risk
We’re seeing this more and more in our valuation work. What was once a fairly standard property now includes high-performance insulation systems, renewable energy tech, complex heating installations and airtight finishes.
This all matters. If something goes wrong, the cost to rebuild doesn’t mean returning the property to how it was 20 years ago, it means reinstating all of those systems to modern standards. That includes the high-spec insulation, the triple glazing, the low-carbon heating system. All of it.
Where cover falls short
Our data shows that 76% of properties in the UK are still underinsured. Energy retrofits, while necessary, are making that gap even wider, especially when owners don’t realise that those changes affect their insurance.
Often, upgrades are done between renewals, and the policy isn’t updated. Other times, owners assume that energy efficiency doesn’t really touch their insurance.
But it does. A new heating system or advanced insulation can materially alter a property’s rebuild value. If those changes aren’t captured, cover may fall thousands of pounds short.
What brokers can do?
Brokers are in a great position to step in. A simple question during a renewal, like, “Have you made any improvements to the building?”, can go a long way. If the answer is yes, it’s time to consider a rebuild reassessment.
Desktop assessments are ideal for many standard properties as they’re faster, affordable and environmentally low-impact. They’re an easy win for brokers looking to stay ahead of the curve and support their clients more holistically.
Energy upgrades are essential. However, without updated cover, even the greenest property can be left exposed. As we build better homes, we need to build smarter insurance habits too.
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