This persistent shortfall leaves businesses dangerously exposed. If a major incident occurred tomorrow, could your operation afford the cost of replacing or repairing critical equipment out of liquid reserves or current cash holdings? For most, the answer is no.

In this article, we tasked our team of surveyors and valuers to draw on their technical skills and practical expertise in this area to uncover what’s causing the ongoing insurance gap for plant and equipment and share real tips on how businesses can mitigate their risk.

Insurance statistics – Plant, equipment & contents 2025

What’s causing the insurance gap in plant and equipment?

There are several key reasons why underinsurance remains a widespread issue in plant and equipment…

Asset churn and upgrades

In fast-paced sectors like manufacturing, logistics and food production, equipment is regularly upgraded, reconfigured or relocated. Insurance statements of values often don’t keep pace.

Outdated or generic estimates

Many businesses rely on historical figures or broad-brush online estimating tools that fail to capture real-world variables like unique equipment, inflation, market scarcity, exchange rate fluctuations or site-specific installation requirements.

Blind spots in risk assessments

Internal valuations often overlook essential factors such as expensed items or leased equipment. They may also fail to recognise that values ought to be based on new rather than second-hand costs, and reflect custom modifications. All of these factors can significantly impact reinstatement costs.

Shifts in regulation

New legislation, industry standards and compliance requirements often mandate modifications, upgrades or additional safety features. If your declared values don’t reflect these, you’re already falling behind.

Supplier pricing volatility

Pricing for plant, equipment, and materials remains volatile. And it doesn’t look like it’s stabilising any time soon, particularly with the recent supply chain disruption driven by global tariff uncertainties. According to the BCIS construction industry forecast, building costs are estimated to rise by 17% over the next 5 years, while tender prices will rise by 15% over the same period. 

Why this matters – Underinsurance examples in plant and equipment

Imagine this: a fire damages your production line. Your current policy, which is based on values set three (or more) years ago, doesn’t come close to covering the cost of replacement. Whether that’s due to inflation, recent equipment upgrades, or a combination of different factors.

Worse, global supply chain delays mean lead times for new machinery have lengthened, bringing your operation to a halt for months or years. Business continuity is out the window, and recovery is both slow and expensive.

This is exactly the kind of real-world scenario we see all too often. For example, back in 2021, the Bridgewood Plastics site in Hull was devastated by a huge fire. While, thankfully, no staff or members of the public were injured, the warehouse roof caved and around 70 homes in the surrounding area had to be evacuated. The company, which had been in operation for over 30 years, sadly failed to bounce back and folded soon after the disastrous blaze. While incidents like this are often unavoidable, ensuring your plant and equipment is adequately covered can help protect your business.

What are the potential consequences of inadequate insurance cover?

We’ve already covered the risks of incorrect declared values as part of our Frequently Asked Questions series, but in terms of plant and equipment, here are some of the consequences inadequate insurance might put you at risk of:

• Partial claim payments: If declared values fall short, insurers apply “average” clauses, reducing your claim payout in proportion to the undervaluation and leaving you out of pocket.
• Delayed recovery: In real-world events, reduced payouts and long equipment lead times can stall operations and throttle revenue.
• Strain on working capital: If your insurance doesn’t cover full replacement or reinstatement costs, the shortfall has to come from somewhere (usually your own reserves or emergency borrowing). That can strain liquidity and force difficult trade-offs elsewhere in your business.
• Business continuity plan breakdown: An outdated valuation undermines the assumptions behind your business continuity plan, leaving you exposed when you most need a strategy for stable recovery.
• Regulatory and contractual risks: In some sectors, failure to reinstate critical machinery within an agreed timeframe can breach contracts.

What can your business do to mitigate the risk?

Here’s how business owners and risk managers can take control:

1. Don’t delay reviewing values

Review your policy and declared values regularly, especially after major investments, upgrades or structural changes. RICS guidelines, as determined after discussions with insurers, suggest that declared values are adjusted annually to reflect the rate of inflation, with a major review every three years.

2. Understand your exposure

Beyond the equipment you own, understanding how external forces could affect your ability to replace plant and equipment is key. Monitor the cost trends of key assets and components, especially if they’re imported or made from materials sensitive to geopolitical or economic changes.

3. Review your continuity plans

A Business Continuity Plan (BCP) is only as good as the assumptions it’s based on. Update your business continuity strategy and business interruption insurance cover regularly to accurately reflect realistic equipment reinstatement periods.

4. Get a professional valuation

Relying on internal estimates or online calculators might not provide the most accurate overview of your assets, especially if your business depends on specialised machinery or complex operational setups. Instead, a valuation from a recognised expert like Charterfields gives you a defensible, auditable basis for your declared values which can strengthen your position with insurers in the event of a claim. 

Partner with the experts in plant and equipment insurance valuations

As Aviva’s official specialist partner for plant and equipment valuations, Charterfields delivers independent reinstatement cost assessments designed to close the insurance gap and reflect the full picture: from specialist machinery and installation to delivery timeframes, compliance standards and site constraints.

Get peace of mind that your assets are accurately valued and properly insured, and reach out to our team today.

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