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Home Insurance Payout Cut for Underinsurance
If your home or contents were insured for less than they were worth and your policy has an "average clause", the insurer may pay only part of a claim. The Financial Ombudsman checks whether the insurer's questions were clear and whether you were warned about underinsurance.
At a Glance
Your Rights
What the rules say, with a link to the official source for each.
Underinsurance
How It Works
With an average clause you pay a proportion of any loss if you insured something for less than its replacement value. For example, a home with a £400,000 rebuild cost insured for £200,000 is 50% underinsured, and some insurers would pay only 50% of the claim. source
What the Ombudsman Checks
Whether the questions were clear, fair and not misleading; whether the insurer gave helpful guidance; whether it had a valid average clause and asked for the full rebuild or replacement cost; and whether you were warned. It may tell the insurer to pay in full and award compensation for distress. source
Time Limits to Know
Miss a deadline and you can lose a right. Check the dates on your own paperwork.
- 8 weeksInsurer's time to give a final response to a complaint8 weeks for most complaints
- 6 monthsRefer a complaint to the Financial Ombudsman ServiceWithin 6 months of the date on the insurer's final response
Steps to Take
Step 1 of 5
Ask the insurer how it calculated the reduction.
Step 2 of 5
Ask for the questions you were asked when you bought the policy.
Step 3 of 5
Check whether you were warned about underinsurance.
Step 4 of 5
Complain in writing. We do not take insurance or banking complaints as cases, but our free letter templates can help you write to the firm.
Step 5 of 5
After 8 weeks, or a final response, go to the Financial Ombudsman Service.
(Tap the numbers to reveal steps)
Where to Go If It Is Not Put Right
Your options, in order, and when each one applies.
The Insurer's Complaints Team
Always start here, in writing.
Financial Ombudsman Service
After 8 weeks with no final response, or if you are unhappy with it. Refer within 6 months of the final response.
Good to Know
Small things that make your complaint stronger.
Check your sums insured every year, especially after improvements.
Want Help?
If you would like one of our team to look at your problem, our initial case review is free. We cannot guarantee any outcome and we do not give legal advice.
Lead reviewer
Luke Marley
Founder and Lead Reviewer
Luke founded CPUK in 2026 after seeing how hard it is for ordinary people to get problems with companies put right. He oversees our guides and checks them against official sources.
Research by Katie Burt, Co-founder and Operations Lead (17 years in the care sector, including managing services for vulnerable adults), and the CPUK Research Team. Researched with AI-assisted research tools, then checked and corrected by our team.
Last checked: 13 October 2026. We are not paid by the companies we write about. Adverts never affect our guidance. Read our editorial policy.
Sources and official links
- financial-ombudsman.org.uk/consumers/complaints-can-help/insurance/home-insurance/underinsurance Checked 13 October 2026
- financial-ombudsman.org.uk/consumers/complaints-can-help/expect/time-limits Checked 12 October 2026