Is Average Clause just for partial loss?

Hello again, its been a while that i haven’t been blogging about insurance. Went busy the past few months. Anyway, i encountered a tricky question about insurance and i consulted with my friends from my Linkedin group IRMP-Asia. The question is ” Is average clause  only applicable to

partial loss?” To the many who is not aware of average clause, please read it here. I personally believed that average clause should be applicable to both partial and total loss in terms of property insurance like cars and houses or buildings. Because this is the safety net of insurance companies to minimize

underinsurance. Many of the insuring public here in the Philippines is not aware of this. They know insurance but they don’t know the real essence of it! Mostly the rich sectors are culprits of this practice. They thought that by insuring a portion of the real properties worth will save them a few thousands from the annual premiums but they forgot that they are buying risk insurance that will save them a million’s worth in times of peril. I believe they got lost their that there main focus is to bargain their insurance premium. Anyways please see the comments from my linkedin account:


2 Replies to “Is Average Clause just for partial loss?”

  1. OIC, that’s clearer.
    Thanks! actually in the Philippines, the answer differs according to the insurance companies’ underwriter. Where are you from?nn1

  2. Average clause is not applicable in case of total loss. If the property is underinsured, then the owner or assured is the co-insurer to the portion not covered. Hence, in case of total loss, the insurance company will pay the sum insured, not the total value.

    Also, there is no average clause in motor car insurance.

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