Construction Underinsurance – In Focus

Rising material and labour costs, complex supply chains, and evolving contracts are putting construction firms at greater risk of underinsurance. This free guide highlights the most common underinsurance pitfalls and how contractors can make sure their cover reflects today’s realities.

Download the Free Guide (PDF)

Executive Summary

This one-page guide outlines the most common causes of underinsurance in the construction industry and the potential impact on claims and business continuity.

Where construction firms face underinsurance risk:

• Contract works: Projects may exceed original estimates or not be updated as they progress

• Owned and hired plant: High-value equipment often undervalued or not listed correctly

• Stock and materials: Fluctuating costs and delivery delays affect replacement value

• Liability exposure: Gaps between cover and actual contractual responsibilities

• Business interruption: Indemnity periods too short for full recovery post-incident

Why this matters:

• Inaccurate sums insured lead to reduced payouts

• Firms may be unable to complete jobs on time, losing future contracts

• Rebuilding supply chains, sites, or staffing can take much longer than expected

How to stay protected:

• Update policy values regularly, especially on long-term projects

• Review contract wording to understand your responsibilities

• Work with a broker to align cover with risk across each stage of the project

This guide is essential for building contractors, developers, and construction firm owners responsible for insurance decisions.

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