What if I’ve underinsured my home?

If you have underinsured your home and there is a loss then the ‘Average’ may apply.

The concept of Average is:

  • For partial damage, all homes that are not fully insured become subject to Average and you are your “own insurer” for uninsured value.
  • Average is the rate-able portion of the full value against the insured value to each and every loss and is calculated as:

(Insured value of home/Full value of home) x Loss

e.g.     Full value of home – $200,000

Insured value of home – $150,000

Loss – $50,000

Average = (150/200) x 50,000 = $37,500

So, of the $50,000 loss, you would be paid $37,500 less any applicable deductible.

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