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Imagine you suffer a fire which causes £180,000 worth of damage to the building, but only have insurance reinstatement cover of £300,000. You might think - "no problem, I have almost twice that amount of cover", but you forget the average clause.

The effect of the average clause is that the Insurance Company says "the true reinstatement value is £600,000, but you are only covered for £300,000 - half the real amount, therefore, we will only pay half of any valid claim you make". The Insurance Company therefore pays out £90,000 - leaving you £90,000 short.

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Q: What is the Average Clause in an Insurance Policy?
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