UnderInsurance

Under-Insurance

Certain Cover Sections - Fire, Business Interruption, Commercial Motor, Engineering Plant and Electronic Equipment, contain Under Insurance / Average clauses that may limit the amount that paid when You have a claim. This will only happen if You understate a Sum Insured or Declared Value.

Example
You insure Your Building for a Sum Insured Value of $70,000.
Your Building is damaged in a fire.
The cost of repairs to Your Building is $30,000.
The value of Your Building at the time of the accident was $100,000.
Under-Insurance is applied on the value of Your Buildings that is less than 80% of the true value.

Claim payment =

$70,000

______________ x $30,000

$100,000 x 80%

= $26,250

In this example claim paid would be $26,250 for the cost of repairs to Your Building.

Please note sums insured on buildings/replacement costs carefully. Much evidence to suggest building costs have risen at a miniumum of 30% over past year 2005/06.

Please contact your broker for further information on Sums Insured and Underinsurance.