I have been aware of it for years, but I worked for a year in an insurance company.
Most people know that they should insure their home for its full value, and not for 50% of its value, even if they don't know the expression "average clause".
Brendan
This is a condition set by an insurer that a payment for damage or loss will be in proportion to the value insured. So, if a building worth €100,000 but insured for €50,000 is totally destroyed, the insurers will only pay €25,000.
i don't think that this is correct.
If i insure half the value of a building, i will get half the value of any claim.
So if there is €100k of damage, i will get €50k compensation.
If there is €10k damage, i will get €5k compensation.
I don't think that this is correct.
If I insure half the value of a building, I will get half the value of any claim.
So if there is €100k of damage, I will get €50k compensation.
If there is €10k damage, I will get €5k compensation.
I don't think that this is correct.
If I insure half the value of a building, I will get half the value of any claim.
So if there is €100k of damage, I will get €50k compensation.
If there is €10k damage, I will get €5k compensation.
Hi DB
I was quoting Charlie, not Sunny. I think that Charlie is incorrect.
Brendan
Just re-read what Charlie said and yes, he is wrong.
If rebuild is €100k and €100k worth of damage is done, you get the €50k you insured it for.
If rebuild is €100k and €50k worth of damage is done, if you insure it for €50k, you only €25k.
The question is, what happens if the cost of a rebuild increases by 25% from the time you paid your premium and you claiming? Does the clause apply then or do they do they look at it at the policy renewal date?
Steven
www.bluewaterfp.ie
Well the Financial Times seems to agree with Charlie
Definition of average clause
A condition set by an insurer that a payment for damage or loss will be in proportion to the value insured. For example, if a building worth £100,000 but insured for £50,000 is totally destroyed, the insurers will only pay £25,000.
http://lexicon.ft.com/Term?term=average-clause
Under what circumstances would an insurer ever pay out more than the sum insured?
I always understood that if I insured the contents for €50K then this was the max that I could ever get under that policy
If that is the case then why would an insurer ever need to invoke an average clause?