Co-insurance, Average or Under Insurance
Under Insurance is technically known as co-insurance or average. The principle of co-insurance generally means if an insured under insures their property, they are deemed as an insurer for the proportion under insured. However, for such a clause to be effective, it must be brought to the notice of the insured, before the contract is entered into. Most insurers include it in the duty of disclosure notice.
Where the amount of the loss or damage is equal to 5% of the sum insured or less, contribution does not apply, and in the event of a total loss the full sum insured is paid.