Average Flashcards
1
Q
What is the principle of Average?
A
This principle is important where the subject matter of the insurance is under-insured. There will usually be a clause in the insurance contract which provides that the insured can recover only the proportion that the sum insured bears to the actual value of the property
[So if the value of the subject is £10k but is only insured for £1k and there is damage worth £5k, then the insured doesn’t receive the £1k that he’d insured the item for he only gets £500 since the insured is entitled to 10% of the loss on the basis that he has insured 10% of the value.].
