New data reveals businesses across the Capital could be under dangerous financial threat due to underinsured property. Here’s what it means for your London business.
Many London businesses may think they’re saving money by paying less than needed on property insurance premiums, but the silent threat of underinsurance could have dire financial repercussions.
Releasing new data as part of a full-year review, the experts at RebuildCostASSESSMENT.com reveal that 73% of commercial properties across the Capital were estimated to be underinsured on average in 2024. However, this rises to an alarming 8 in 10 for some London districts.
Which London regions fall most foul to the risk of underinsurance? Some areas of the Capital are more impacted than others, so you could be operating in an underinsurance hotspot.
London is a key economic hub for local, national and global businesses. The risk of commercial property underinsurance is felt across the United Kingdom, but the financial consequence could be exposed here most keenly. On average, 73% of London commercial properties were estimated to be underinsured in 2024. Across all districts, at least 6 in 10 businesses could be affected in the Capital.
The east side of London is revealed to be the greatest underinsurance hotspot compared to all other Capital districts. East London is the most likely area to be impacted by commercial property underinsurance (8 in 10), which includes areas such as Hackney, Islington, Barking and Dagenham.
Underinsurance for commercial properties in North London is also alarmingly high, just shy of those in East London with 78% of commercial properties reviewed in 2024 being deemed underinsured by RebuildCostASSESSMENT.com.
Of the most central London locations, businesses operating in East Central London are more likely to be affected than those in West Central. This leaves many local businesses liable to face unexpected and costly rebuild charges if their premises are damaged.
While West Central London (63%) and West London (66%) are the least affected across the Capital, the rate of commercial property underinsurance is significant too. With over 6 in 10 commercial properties impacted, businesses operating in these districts should be equally aware of the risks this poses.
Elsewhere in the United Kingdom, Huddersfield is the most likely to be underinsured when looking at the UK’s 15 largest cities and towns. The Yorkshire town has a commercial property underinsurance rate of 85%. On this list, London ranks eighth just behind the likes of Liverpool and Manchester but ahead of Bristol, Birmingham, Glasgow and Edinburgh.
Is your London business operating in an underinsurance hotspot? Here’s what the risk could mean for your business. Johnny Thomson, Marketing & Communications Director at RebuildCostASSESSMENT.com, discusses the danger of commercial property being underinsured and how to ensure your insurance is accurate:
“Commercial property or building insurance is a safeguard for businesses. It covers significant property damage risks such as fire, flooding and vandalism. But as is shown across our data findings, the common pitfall of underinsurance is experienced by a huge number of businesses and property owners. The financial impact of underinsurance can be crippling. It means that while you may be insured for a sum, the safeguard isn’t operating as it should if the worst happens.
“For instance, an owner of an independent retail shop may be covered for £150,000 in building insurance, but the true rebuild cost is actually £250,000. The cover here is £100,000 short of the total rebuild cost, meaning the business owner is responsible for the remainder of the costs. In the event of a fire caused by an electrical fault which damages the property and destroys valuable stock, what’s known as the ‘average clause’ would apply when providing insurance cover for any damage done to the property. The insurer would pay only 60% of any claim and the rest would fall on the owner. The consequences of such an event could cause the business to cut operational budgets, take out loans, or face closure.
“We stress to commercial property owners the importance of having an accurate rebuild cost assessment to understand the correct amount their property should be insured. You can’t stop a disaster from striking, but being insured for the correct amount is a true financial safeguard for any business during a time of great strain and loss. It will give the business property owner and their employees greater peace of mind and avoid the risks of underinsurance.”
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