Underinsurance
The classes of insurance listed below contain provisions as to average and underinsurance. This means we require you to insurance for the full value or maximum potential risk. if you do not do so, and you are underinsured, the Underwriter will pay you less in the event of a claim, calculated by a formula in the policy which takes account of the degree of underinsurance.
Classes of Insurance containing underinsurance clauses:
- Business Insurance
- Contractors Plant and Machinery
- Construction/Liability
- Trades Insurance
- Office Insurance
- Fire
- Industrial Special Risks
- Farm Insurance
- Loss of Profits
- Machinery and Electronic
AVERAGE OR COINSURANCE
If your insurance cover is provided by an Industrial Special Risks, Fire & Perils, Business Package or Business Interruption/Consequential Loss policy it will usually contain an Average/Co-Insurance clause. These clauses typically apply where coverage is triggered by damage to property and the sum insured is expected to reflect the full replacement value of property or the annual profit of the business. This means that if the sum insured(s) you nominate for the insured property / profits etc. are less than 100% of their full value at the time the insurance was effected (or renewed), then part of the loss will/may not be covered by the policy. For example, a policy with a 100 % co-insurance clause pays as follows: if a building is insured for $150,000 when its value is $200,000, then in the event of a claim for damage of $100,000, underwriters will only pay $75,000 and you will suffer an uninsured loss of $25,000. Therefore, it is important that the Sum Insured(s) you select are adequate to represent the full value of the insured property / profits and are calculated in accordance with the cover being arranged.