Question

The purpose of average clause is to

Answer 1

Answer:

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Average clause: A clause in a policy requiring that, where assets are insured for less than their full value, the insured is required to bear a proportion of any loss.A fire insurance policy has an average clause mentioned in it which takes care of the cases of the under-insurance. In the fire insurance policy, if the assets are insured for less than their full value, the insured is required to bear a proportion of the loss according to the average clause mentioned in the policy document.

A fire insurance policy has an average clause mentioned in it which takes care of the cases of the under-insurance. In the fire insurance policy, if the assets are insured for less than their full value, the insured is required to bear a proportion of the loss according to the average clause mentioned in the policy document.Since the fire insurance policy is a contract of indemnity, the insured cannot claim more than the actual amount of loss caused by the fire.

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Answer 2

A clause in an insurance policy that restricts the amount payable to a sum not to exceed the value of the property destroyed and that bears the same proportion to the loss as the face of the policy does to the value of the property insured — compare coinsurance.