Why underinsurance risk is rising for commercial buildings in 2026

Please find an article from our colleagues at Rebuildcostassessment.com, UK-based providers of professional RICS‑regulated rebuild cost valuations, used to help property owners and insurers avoid underinsurance.

Commercial properties across the UK face a growing risk of underinsurance in 2026 as rebuild costs and compliance requirements continue to change. Rising rebuild costs, regulatory change and more complex rebuilding requirements 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,” said Gautham Rajendar, 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 shows 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 stronger increases in areas such as new housing materials and repair and maintenance.

Warehouses, manufacturing sites and retail premises can be especially exposed because rebuilding often involves complex electrical, safety and mechanical systems.

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 Where insured values are based on outdated or simplified figures, policyholders may face a shortfall when they need cover most.

Outdated or unsupported sums insured can create both financial and compliance risk. The FCA’s Consumer Duty requires firms to deliver fair outcomes for customers. A Professional Rebuild Cost Assessments (RCAs) helps support cover decisions with a reliable and current rebuild figure.

“Some insurers are placing greater emphasis on the evidence behind declared sums insured,” Gautham added. “They want to see that the figure has a clear basis, rather than a round number or a simple indexation uplift.”

The priority for owners is clear: review valuations regularly. A full RCA every three years, or sooner if the property has changed, helps keep cover aligned with current rebuild costs and compliance requirements. As standards continue to evolve, accurate rebuild cost data is becoming increasingly important.

Reduce the risk of underinsurance with a professional Rebuild Cost Assessment.

You can find out more about rebuildcostassessment.com here.