Imbalanced sums insured: why it happens and how to address it

The home insurance market is ever evolving, shaped both by the changing needs of property owners and by the types and frequency of claims insurers pay each year. One growing challenge we see is the issue of imbalanced sums insured. This is where the buildings sum insured is disproportionately high compared to the contents sum insured.

Understanding the buildings-to-contents ratio

Increasingly, home insurers look for a balance between the buildings sums insured and the contents sums insured. As a guide, many insurers become cautious when the contents-to-buildings ratio falls below 10%. A higher ratio is generally viewed more favourably.

When the ratio is unusually low, it raises questions for underwriters because it falls outside the patterns they typically see for similar homes. This doesn’t automatically mean something is wrong, but does create uncertainty about the true nature of the risk. An underwriter may ask themselves:

• Is the property genuinely modestly furnished?
• Is the client unsure how to value their contents?
• Are some valuables kept elsewhere or not disclosed?
• Is the property lived in full time, part time, or let out?
• If one figure appears unusual, are the other declared details also correct?

This uncertainty makes it more difficult for insurers to confidently assess their exposure or set the right premium. In other words, they need to know whether they’re being asked to insure:

• a perfectly legitimate, modestly furnished home with a high rebuild cost, or
• a property where there may be undisclosed contents or underinsurance.

Insurers are naturally cautious when the information doesn’t match expected patterns, not because the client has done anything wrong, but because the imbalance creates too many questions.

Why homeowners may legitimately have an imbalance

With a client base across the UK, we see this imbalance issue arise in areas where:

• Property purchase prices are relatively low but the rebuild cost is high, often because the property is listed or built with specialist materials.
• Clients to furnish their homes modestly, resulting in lower contents value

This combination can mean homeowners fall into what refer to as the ‘imbalance trap’, where an insurer may decline to quote or may question the risk at renewal.

How we help clients who fall into the imbalance trap

To support clients whose circumstances appear imbalanced insurers, we work closely with them to review their sums insured. Where helpful, we will visit the client’s home in person to review them and reassure the insurer. This practical support often provides the clarity and confidence insurers need to proceed.

Case study: Overcoming a perceived imbalance

A recent example involved a seven-bedroom A-listed terraced property on the outskirts of Edinburgh’s New Town. The buildings sum insured was assessed at £2.3 million, but the client estimated their contents at £100,000 – creating contents-to-buildings ratio of less than 5%.

The insurer raised concerns about this imbalance and was reluctant to renew the policy.

We visited the client, reviewed the property, and established a more accurate contents sum insured figure of £125,000. Although, in the eyes of the insurer, this was still low in ratio terms, once we confirmed there was no underinsurance, the insurer was satisfied and renewed the policy.

How we help you navigate the imbalance trap

If you’re unsure whether your current sums insured reflect your home and contents accurately - or if an insurer has raised concerns about an imbalance - we’re here to help. Our strong relationships with high-net-worth insurers, combined with our connections to trusted building surveyors and valuers, mean we can help you establish and evidence the accurate sums insured. As your broker, we not only guide you through the process but also negotiate with insurers on your behalf, ensuring your policy reflects your true circumstances and that your cover responds when you need it most.

If you’d like to speak to us about your sums insured call 0131 553 2293 or email privateclients@howdeninsurance.co.uk

Mark Richards

With over 15 years in Private Client insurance Mark Richards heads the Howden Private Client division in Scotland. Before becoming a broker, Mark spent his career as a Fine Art auctioneer and valuer, including as Managing Director of Bonhams Scotland. This specialist background gives him insight into how properties, contents and collections are valued, and why imbalances can arise. Mark now uses this expertise to help clients accurately evidence their sums insured and secure insurer confidence, particularly for listed and complex homes.

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