Commercial properties across the UK are facing a growing risk of being underinsured in 2026, according to RebuildCostASSESSMENT.com. This underinsurance risk is being created by rising rebuild costs, regulatory changes and more complex rebuilding requirements, which can leave even well-managed portfolios underinsured, if sums insured are not kept up to date.
“Commercial reinstatement is inherently more complicated than domestic rebuilding,” says Gautham Rajendar, who is Technical Lead for Commercial Properties at RebuildCostASSESSMENT.com. “Multiple occupancies, bespoke fit-outs and compliance standards all add to the rebuild cost, and those factors are often underestimated.”
Recent government data reveals that construction material prices remain higher than a year ago. Department for Business & Trade data shows prices were around 2% higher in January 2026 than in January 2025, with larger increases in areas such as new housing materials and repair and maintenance.
Warehouses, manufacturing sites and retail premises can be especially exposed because rebuilds will often include complex electrical, safety and mechanical systems.
Regulation continues to shape rebuild costs
Regulatory change adds another layer of risk. The Building Safety Act, along with evolving fire safety and energy efficiency standards can increase the cost of rebuilding after a loss. Where insured values are based on outdated or simplified figures, policyholders may face a shortfall, when they need cover most.
Outdated or unsupported sums insured can create financial and compliance risk. The FCA’s Consumer Duty rules require the delivery of fair outcomes for customers. Professional Rebuild Cost Assessments (RCAs) help support cover decisions with reliable and current rebuild figures.
“Some insurers are placing greater emphasis on the evidence behind declared sums insured,” Gautham Rajendar added. “They want to see that the figure has a clear factual foundation, rather than being based on a round number or a simple indexation uplift.”
The priority for owners is clear. Review valuations regularly, with a full RCA every three years, or sooner if the property has changed. This helps to keep cover aligned with current rebuild costs and compliance requirements. As standards continue to evolve, accurate rebuild cost data is becoming increasingly important.
