In non-marine property insurance if a sum insured is ‘subject to average’, and the sum insured is less than the value at risk at the time of loss, the claim will be reduced in the same proportion. The measure combats under-insurance.
Agricultural products and ecclesiastical property are subject to the special condition of average (the 75 per cent condition) as values fluctuate or are difficult to assess. If the sum insured is 75 per cent or more than the value at the time of loss no deduction is made for partial losses. The two conditions of average applies where property (e.g. A) is insured under both a specific policy and a more general policy covering property that includes additional property (e.g. A, B and C) under an inclusive sum insured. The first condition is pro rata average while the second is initially ‘non-contribution’, i.e. the more specific insurance pays first, leaving only any uninsured balance to be recovered under the general policy on the basis of pro rata average.