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Condition of Average
- a condition usually to be found on most insurance policies which comes
into effect when partial damage occurs and the building has not been insured for full reinstatement
value, but for replacement - a building offerring similar accommodation,
but in modern materials.
For example, a person owning an old house
might choose to insure it for replacement value say £250,000 not reinstatement value which will be a larger sum,
say, £500,000. Because it has been insured for only half its true
value, in the event of partial damage say, £40,000 only £20,000 would be paid out.
A very important fact to be aware of when related to a listed building where restoration might be mandatory.