Average Clause


All insurance policies are contracts and as with all contracts, they are full of terms and conditions.

When insuring a building, there is a clause you really need to know about and understand, as when it comes to making a claim, it can cause big problems!


It’s called the AVERAGE CLAUSE. But what does it mean? A simple summary is that if you insure your building for an amount that is too low, your insurer can reduce how much they will pay out in the event of a claim


If a policy is arranged to cover a building with a sum insured of £80,000 and at the time of a loss the amount should have been £100,000, the claim will be settled at 80% of the loss suffered.


Should you suffer a loss of £5,000, then insurers would apply 80% to this amount and settle for £4,000, of course your excess would then be deducted from the final amount.


What can I do to avoid suffering a shortfall claim payment subjected to the Average Clause?


You need to make sure that you declare the correct ‘sum insured’ to your insurance broker. The sum insured is not necessarily the value of your property but the cost to clear all debris, pay professional fees and rebuild. The association of British Insurers provide a helpful calculator on the following site https://abi.bcis.co.uk/calculator/calculator.aspx


You could have your property surveyed, for a chartered surveyor in your area, please go to https://www.ricsfirms.com/


Insurers understand that market conditions can fluctuate during the year of insurance and offer some protection in the form of optional index linking or day one uplifts. It’s important to speak with your broker to find which option you are most comfortable with.


Call us on 02891 311011, WE’RESURE we can give you the correct advice to avoid being the victim of the Average Clause!



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