Imagine this scenario: A fire causes significant damage to your home. Your insurance only covers half of the repair costs, leaving you with thousands of euros in unexpected expenses. This is an unfortunately common situation known as underinsurance. It occurs when your insurance coverage is insufficient to cover the actual value of your property in the event of damage or loss.

What is Underinsurance?

Underinsurance happens when the value you declared for your insured property is less than its actual value. For example, if your home is worth €300,000 but your insurance only covers €150,000 (you gave this value), you are underinsured by 50%.

Why Does Underinsurance Occur?

Several factors can lead to underinsurance:

  • Inaccurate Valuation: The value of your property may increase over time without your knowledge, leaving you underinsured.
  • Premium Reduction: You might opt for lower coverage to reduce your insurance costs, risking your financial security.
  • Property Changes: If you make improvements to your home that increase its value, you may need to adjust your insurance coverage.
  • Misunderstandings: You might not fully understand the terms of your insurance policy, leading to inadequate coverage.

The Proportional Clause: A "Hidden Trap"

Many insurance policies include a proportional clause. According to this clause, in the event of underinsurance, your compensation is reduced proportionally to the degree of underinsurance. Here’s an example:

  • Home Value: €400,000
  • Insurance Coverage: €300,000 (25% underinsured)
  • Damage: €100,000

According to the proportional clause, you would receive only €75,000 in compensation (75% of the damage), instead of the €100,000 you thought was covered.

How to Avoid Underinsurance:

  • Consult an Insurance Advisor: An experienced insurance advisor can help you assess your needs and choose the appropriate coverage for each of your assets. You can call 77771414 for assistance.
  • Read the Terms Carefully: Ensure you fully understand the terms of your insurance policy, including the proportional clause and any exclusions.
  • Consider Additional Coverages: Think about additional coverages, such as for natural disasters or theft, to have more comprehensive protection.
  • Review Your Insurance Regularly: The value of your assets and your needs may change over time. It is important to review your insurance regularly to ensure it remains adequate, especially before renewing your policy.


Underinsurance can have serious financial consequences in the event of loss or damage. By following the above advice, you can avoid underinsurance and ensure your property is fully protected.