What is the average clause in insurance?

Where the sum insured is less than the value at risk, the average clause pays the same proportion of the loss that the cover bore to the value. A property insured for half its value recovers about half of any loss, not the full amount up to the sum insured.

Does underinsurance only matter on a total loss?

No. The average clause applies to partial losses in the same proportion, so a business can be underinsured for years and only discover it on a small claim.

Before the loss

How much of your own claim would you be paying?

Underinsurance is the commonest reason a well-run claim still pays short. Three numbers will tell you where you stand. Nothing is sent anywhere and nothing is stored.

A ledger open at an account, one line ruled through. An illustration.

What this does and does not tell you

What it does

It applies a standard average clause, which is the mechanism nearly every property and marine policy in India uses to deal with under-declared values.

It shows the working, because a figure you are going to argue with an insurer about should be one you can reproduce.

What it cannot

It does not know whether your policy carries an average clause, or on what basis it values property, whether that is market value, reinstatement value or agreed value. Those change the answer completely and only the wording knows.

It applies one flat excess. Real policies carry percentage excesses, time excesses and per-item limits.

Nothing is storedThe numbers are worked out while the page is built and then thrown away. Nothing is written down at this end and nothing leaves your browser. Close the tab and they are gone.

Want the real position on your own policy?

Whoever placed your policy, and whatever stage the claim has reached.

Report a loss Call 92514 56334