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Average clause is defined as hereunder :-
If a loss occurs and the market value of the loss suffered is greater than the amount for which it was insured , the insured will suffer from apartial loss.The insurer will not pay the full value of the loss ,and the insured will retain the difference as a proportionate share.
The logic behind is taht the initial premium paid by the insured is calculated from the initial policy value and not from the actual value as appedred after the inident, hence the initial premium charged from the insured is less than that actually to be charged.
Best wishes.
