What to Do If Your Insurance Claim Amount Is Too Low?

If you’ve had an insurance claim and noticed the amount you’re being offered is lower than expected, don’t panic. There’s a process to follow, and you’ve got options to get it sorted. Here’s what to do next.

Step 1: Check your policy documents

Before contacting your insurer, review your policy documents carefully. A lower-than-expected offer is often explained by something in the policy terms rather than an error on the insurer’s part.

Key things to check:

• Single-item limit: Most policies cap the payout for any single item at a set amount, commonly £1,000 to £2,000. If your item is worth more and wasn’t declared separately, the shortfall may be down to this limit. High-value item cover explains how to avoid this in future.
• Sum insured: If the total value of your belongings exceeds your sum insured, the average clause may apply, which means your insurer pays only a proportionate share of any claim. Our guide on what is underinsurance explains how this works.
• Exclusions: Check whether the specific cause of the loss or damage is excluded from your cover.
• Excess: The excess amount is deducted from any payout.
• New for old vs indemnity: Some policies pay the current market value of an item rather than the cost of a new replacement. Check which basis your policy uses.

If you still believe the offer is too low after reviewing the policy, move to the next step.

Step 2: Gather your evidence

To challenge the offer effectively, you need documentation that supports a higher figure. Collect:

• Receipts or proof of purchase for the items in question
• Photos of the damage or loss
• Like-for-like replacement quotes from retailers or repair specialists
• Any police or incident reports if relevant
• An independent valuation if the item is high-value or specialist

The stronger your evidence, the clearer the case for a higher payment. Our guide on how to document belongings for insurance covers best practice for capturing this kind of evidence.

Step 3: Contact your insurer

Write to your insurer setting out why you believe the offer is too low. Be specific about the amount you expected, the evidence you have, and which parts of the policy you believe support a higher payment.

Ask for:

• A written explanation of exactly how the offer was calculated
• A formal review of the claim amount
• Confirmation of whether any additional documentation would change their assessment

Keep copies of all correspondence and note the dates of any calls or conversations. Written communication is preferable throughout this process as it creates a clear record.

Step 4: Raise a formal complaint

If your insurer maintains their original offer and you still disagree, raise a formal complaint through their official complaints process. This is a more serious step than simply querying the amount and carries more weight in any subsequent review.

Your complaint should:

• Explain clearly why you believe the offer is too low
• Reference the specific policy terms that support a higher payment
• Include all supporting evidence
• Request a written response

The insurer must acknowledge your complaint promptly and provide a final response.

Step 5: Escalate to the Financial Ombudsman Service

If the complaint isn’t resolved satisfactorily within eight weeks, or the insurer’s final response still doesn’t address your concerns, you can refer the case to the Financial Ombudsman Service (FOS).

The FOS is free to use and provides an independent review of whether the insurer acted fairly. If they find in your favour, the insurer may be required to increase the payment or offer compensation.

When you contact the FOS, have ready:

• Your policy documents
• All claims correspondence
• The insurer’s final response
• Your supporting evidence

You have six months from the insurer’s final response to refer a case to the FOS. Our guide on what to do if your insurance payout is delayed covers related escalation steps.

How to avoid a low payout next time

A few straightforward steps when taking out or renewing your policy reduce the risk of being underinsured:

• Review your sum insured annually. If the total value of your belongings has increased, update your cover to reflect it.
• Declare high-value items separately. Anything worth more than your single-item limit needs to be listed individually to be fully covered.
• Document your belongings. Keep photos and receipts in a safe place so you can support any future claim.
• Check whether your policy is new for old or indemnity basis. This affects how much you’ll receive for any claim.

Before we go

A low claim offer is worth challenging if you believe it doesn’t reflect your actual loss. Check your policy, gather your evidence, and contact your insurer in writing. If that doesn’t resolve it, the formal complaints process and the Financial Ombudsman Service are both there to help.

With Lemonade’s home insurance, your policy documents set out clearly what’s covered and how claims are assessed.

Frequently Asked Questions