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When will an Insurer apply “Average”?

The sum insured of the buildings of your house should represent their rebuilding or replacement cost and that of the contents and their replacement cost. Should these amounts be inadequate, insurers apply the condition of “average”, which reduces the settlement amount. In this case, you are underinsured.



Your building is insured for R200 000.00, and the actual reinstatement value of the building is R300 000.00. 
If a claim of R60 000.00 arises for your building, the claim would be settled as follows:
R200 000 / R300 000 x R60 000 = R40 000 amount payable to the insured
In other words, Insured Value divided by Replacement Value Multiplied by the Claim Amount = Amount Payable to You 
It is very important to ensure that you are adequately insured should a problem arise.
We can assist you in finding the right insurance cover for your needs!