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Underinsurance (average)

Boat insurance term, area: Contract

Underinsurance arises when the sum insured is lower than the boat's real value. The insurer may then reduce the settlement in proportion, a principle known as average, and this applies to partial losses too. Insure for 60,000 when the figure should be 100,000, and a claim for 10,000 of damage pays only 6,000.

What to check: Does the wording contain an average clause, and is there any margin before it applies? Does it apply to partial losses as well as to a total loss?

Related topics

• What happens if the boat is underinsured?
• After a refit: does the sum insured move on its own?
• Boat at the boatyard during a refit: is it still insured?

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