It often starts the same way.
A fire, a storm, an accident - something goes wrong on the farm and a claim is made in good faith. The buildings were insured. The paperwork was in place. The sums insured felt sensible at the time. Then, the numbers come back.
For a growing number of UK farmers, the shock does not come from the loss itself but rather from discovering that their insurance only covers a fraction of what it actually costs to rebuild. At the claim stage, underinsurance stops being a technical concept and becomes a very real financial problem.
iFarm’s recent claims data shows just how widespread and costly the issue has become.
Underinsurance is Happening, Right Now
Across farm property claims handled by iFarm, one in ten were underinsured, with declared values falling short by nearly 40% on average. This means claims are reduced by around 45%, leaving farmers to cover shortfalls of over GBP 11,000 per claim, with some losses surpassing GBP 30,000.
These are not marginal errors but material gaps that directly affect a farm’s ability to recover, rebuild and keep operating. Adam Mawer, Technical Underwriting Manager at iFarm, explains:
“Our data clearly shows that underinsurance is not a theoretical risk. It’s happening now, on real farm claims, and it’s costing farmers serious money. We are seeing otherwise valid claims reduced simply because sums insured haven’t kept pace with the true cost of rebuilding modern and traditional farm buildings.”
Why Farms Are Especially Exposed
Underinsurance is not new, but modern farming risks amplify it. Farm buildings do not behave like standard commercial property. Reinstatement costs are driven by factors that are easy to underestimate, such as:
● Non-standard construction and heritage materials
● Specialist rural trades and limited labour availability
● Challenging access, planning restrictions and longer build times
● Confusion between market value and rebuild cost
What looks reasonable on paper can unravel quickly once a loss occurs. Bridget Slade MRICS FAAV, Loss Control Consultant at Securus Risk Advisors, sees this firsthand. She said:
“Many farmers know the term underinsurance, but few realise just how common it is or how devastating it can be when a claim occurs. Traditional valuation shortcuts do not work for farm buildings. Thousands of farms unknowingly have insufficient insurance coverage, resulting in significant financial losses for farmers. Ensuring your buildings are correctly valued protects not just the property, but the future of the farm itself.”
Why Indexation Alone No Longer Cuts It
One of the most common misconceptions is that indexation is enough. In reality, underinsurance is often driven by:
● Outdated professional valuations
● Over-reliance on indexation alone
● Online calculators that do not account for rural complexities
● Rising construction inflation and labour shortages
For farms, rebuild costs do not rise in line with general indices, and relying on them alone can quietly widen the gap, year after year. Adam Mawer continued:
“Agricultural buildings are not standard commercial risks. From livestock sheds and grain stores to heritage farmhouses and stone barns, these assets need specialist underwriting and accurate rebuild assessments. That is where expertise really matters, both at placement and at claim.”
Fixing the Problem Before the Claim
Underinsurance only becomes apparent at the claim stage. That is why iFarm, working closely with our in-house risk advisory service, Securus, focuses on early intervention.
Together, we support brokers and farmers to ensure declared values properly reflect the cost of reinstatement, reducing the risk of average clause deductions when it matters most. This includes:
● Encouraging regular professional rebuild cost assessments
● Reviewing values following building work, price inflation or changes in use
● Combining specialist agricultural underwriting with practical valuation insight
● Using iFarm’s ATOMX platform to shift the role of underwriter from data processor to strategic risk expert
The result is insurance built around how farms actually operate and not how spreadsheets assume they do.
The Cost of Waiting
With construction inflation, labour constraints and rural rebuild complexity continuing to rise, iFarm believes that the underinsurance gap is likely to widen unless action is taken now.
For brokers, this is an opportunity to lead meaningful conversations. For farmers, it is a chance to protect not just buildings, but balance sheets and long-term resilience. Underinsurance is not a future risk; it is already happening, and the farms that fare best are the ones that address it before the claim ever arrives.
