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Co-Insurance (Average)

 

It is common practice for insurance contracts to be subject to Co-Insurance or Average which means that if the 'full value' of the property insured exceeds the sum insured, the Insured would be required to contribute proportionally to each and every loss.  The calculations of 'full value' may vary from one policy to another, depending on the basis of valuation contained in the policy. 

Policies containing average clauses include:

• Fire
• Business Interruption
• Industrial
• Special Risks
• Home Buildings & Contents

 

A simple example is:

       Value of Property            $900,000

       Sum Insured                     $600,000

       Partial Loss                       $210,000

       Insurance Pays                $140,000

       Insured Bears                  $  70,000