The Condition of Average is one of the most critical yet misunderstood clauses in commercial fire, perils, and burglary insurance policies in Kenya.
When an insured property is covered for less than its true replacement value, the insured is considered their own insurer for the difference and must bear a proportionate share of any loss.
Example Calculation
If a commercial building worth KES 50,000,000 is insured for KES 25,000,000 (50% underinsured), and a fire causes damage of KES 10,000,000, the insurer will only pay 50% of the loss (KES 5,000,000), less the policy deductible.
At AMRO Insurance Brokers, we conduct regular sum-insured audits to protect our clients from average condition penalties.