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Top Insurance Tips
Published on the 15th November 2018

Insuring Property Risks

Most organisations will hold some form of property insurance. For some, this will cover their buildings and everything in them, while others may just insure basic office equipment or stock. Whatever property an organisation chooses to cover, the following guidance will help to avoid underinsurance and ensure policies deliver the level of protection required.


Understand the condition of average

Property insurance policy wordings typically include a ‘condition of average’ clause. When underinsurance is present, this condition enables claims settlements to still be made under the policy, albeit reduced in proportion to the level of underinsurance.

For example, if a policyholder mis-states their total contents value by 50%, and therefore only pays 50% of the premium that should have been due, they can only expect to receive 50% of a contents claim’s total value. It is therefore important to carefully assess and declare accurate property values in order to receive full claims settlements.


Application of the condition of average:-


Declared Value

Actual Value

Underinsurance

Claim Value

Claim Settlement

£500,000

£1,000,000

50%

£200,000

£100,000


If you have any queries please contact your Account Handler or complete the Enquiry Form on the website.






 
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