Is your Charity underinsured?

In the event of a catastrophic incident, such as a significant fire affecting your charity’s building, the rebuild cost must be sufficient to cover the required repairs to avoid underinsurance. Our dedicated Charity Insurance team have put together the essential considerations you must have when insuring your property and how can assist you.

Understanding the Impact of Underinsurance

If a claim is necessary and the limit of your cover is inadequate, your insurer might choose to void the policy, refunding any premiums paid. Alternatively, you may receive a ‘reduced payout’ due to an ‘Average Clause,’ allowing the insurer to decrease the liability for a claim by applying a proportional settlement.

An example of underinsurance could be where the rebuild value of your charity’s property is £1,000,000, but your insurance only covers £750,000. In this case, if you need to file a £20,000 claim, your insurer might only pay out £15,000 (75%), leaving you responsible for the remaining £5,000 (25%).

The average clause aims to ensure property owners share the risk of loss with insurers and emphasises insuring the property for its full rebuild cost.

Key Considerations for Calculating Your Charity Building’s Sum Insured

Trustees: Trustees may be liable to pay the shortfall out of their own pockets. To reduce the risk of a shortfall, the Charity Commission recommend that trustees initially obtain advice from a professionally qualified building surveyor about what the rebuild cost should be. It is also recommended that a survey should be taken if you have made any significant changes to your property. If the rebuild cost figure increases or decreases, trustees should notify their insurance provider immediately so that an adjustment can be made.

Labour & Materials: As a result of disruptions in supply chains, there is a shortage of goods and materials, and sourcing labour has become more challenging post-Brexit. This has substantially increased construction costs, potentially leading to a much higher-than-anticipated expense for rebuilding your property.

Listed Buildings: Special attention and associated costs may be required for listed buildings. Usually this would include a team of professionals (architects, surveyors, mechanical and electrical engineers, planning consultants etc.) who have specific experience, qualifications and/or a proven track record of working on such complex buildings.

Assessing Underinsurance

To ensure an accurate and hassle-free insurance experience, our partnership with allows us to provide a desktop valuation for just £169* for properties valued under £3,500,000.

For more information, contact us at 01206 760 780 or

*Acceptance criteria apply.

Site Visits for Certain Properties

For properties valued over £3,500,000 or those that are Grade I, Grade II*, Category A, and Grade A listed properties, we recommend a site visit instead of a desktop valuation. Contact us directly, and we can assist in arranging an in-person visit for property valuation.

About WRS Insurance Brokers

At WRS Insurance Brokers, we are specialists in Charity Insurance and our experienced team is passionate about the charitable sector. Our experience has taught us that one size certainly doesn’t fit all and that every charity and not-for-profit organisation faces its own unique risks.

WRS is part of the Benefact Group, a charity-owned, international family of financial services companies that gives all available profits to charity and good causes.