In today’s world many brands, and people, aim to differentiate themselves from others and be anything but average, be it in the work or personal environment. However, in the insurance world there is a term we use and some still work with called ‘subject to average’. It’s one which I certainly wasn’t aware of before I joined Reis and the insurance world, and it transpires many other people are also unsure of the meaning.
Essentially, it means if the sum insured for an item is less than the insurable or actual value, the amount you can claim under the policy will be reduced in proportion to the under-insurance. For example, if you set the level of accident damage cover at let’s say £5,000 and you declare the cars insurable value at £10,000, then the insurer in this case, under the Average Clause, is duty bound to only pay you 50% of the total claim amount.
Sometimes there is always a reason why some policies are cheaper than others! To avoid being average, always look out for this clause in your policy as some motorsport insurers do use it, it is also worth checking with your insurer if the policy is provided on a ‘First Loss’ basis. Otherwise, imagine your surprise when you claim for £5,000 worth of damage to your race car and the insurer only pays out £2,500!
At Reis that’s not the case. To chat through our first loss policies and avoid ‘subject to average’, give us a call on 01159651020 to discuss further.
Deputy Head of Motorsport Broking