The average clause: what happens when you are underinsured?
The average clause reduces a claim in the same proportion as the sum insured falls short of the insurable value. Published Greek home wordings define that value as the cost of rebuilding with the same materials and construction method, less the reduction in construction value. Because the term is written as a ratio, it reaches every claim, not only a total loss. Here is what the text says and where to find it in your own document.
What does the clause say, and against which value?
Published Greek home insurance wordings of this class provide that where the sum insured is lower than the insurable value, «the indemnity is determined (and limited) on the basis of the ratio between the sum insured and the insurable value». It is neither a penalty nor a discretion: it is a ratio between two numbers, written into the general terms. The wordings call it «αναλογικός όρος» or «όρος αναλογίας»; it is the same thing as the average rule.
It is the second number that surprises people. In the same document, the basis of calculation for buildings is «the necessary cost of rebuilding them with the same materials and construction method, after deducting the reduction in construction value». That is what it would cost to rebuild the structure, less depreciation — not the price you paid for the property, and not a tax figure.
The same rule appears in motor cover, there written as a formula. Published motor wordings define underinsurance as «insuring the vehicle for a value lower than its Current Market Value» and give the calculation: INDEMNITY = SUM INSURED / CURRENT MARKET VALUE × LOSS.
Both texts point to article 17 of Law 2496/1997 as the source of the rule, and the home wording records an exception: for cover written on a first-loss basis (Α΄ ζημιά / Α΄ κίνδυνο) «the average clause shall not be applied to that risk». This page does not report what article 17 provides — only that published wordings cite it.
Because the term is a ratio, its arithmetic is simple. The table shows what the same ratio produces on a €20,000 loss, for three sums insured against one insurable value.
| Sum insured | Insurable value | Ratio | €20,000 loss |
|---|---|---|---|
| €100,000 | €200,000 | 50% | €10,000 |
| €150,000 | €200,000 | 75% | €15,000 |
| €200,000 | €200,000 | 100% | €20,000 |
Plain arithmetic on the ratio the wordings describe, before any deductible. It is not a prediction for a particular claim: the insurable value is defined by your own text, and first-loss cover is outside the term.
Why does the clause go unnoticed?
The two numbers never meet on the same page. The sum insured is printed at the front, on the schedule, and reads like a promise. The insurable value is not a number but a definition, and the definition sits deep in the general terms, in the article on calculating and paying the indemnity. Nothing in the document reconciles the two.
Because the term is a ratio, it does not wait for a total loss. A burst pipe or a partial fire loss is reduced by the same fraction — and partial losses are the ordinary kind. So a difference nobody noticed for years shows up for the first time on the day of the incident, when it can no longer be corrected retrospectively.
Two policies that look alike on the schedule can behave differently, because cover written on a first-loss basis is expressly excluded from the term in the wording quoted here. Which applies to you is not visible from the amount; it is visible from the wording next to it.
How often this happens in the Greek market is not measured by any source we can cite, so we do not claim it. What can be checked is not the frequency but your own document.
What do you look for in your own policy?
Five things to find, with the terms as they are printed on Greek documents and their English equivalents for anyone reading the text in a second language.
| What you are looking for | Term on the document (Greek) | In English | Where it sits |
|---|---|---|---|
| The amount you insured for | Ασφαλιστικό ποσό / ασφαλιζόμενο κεφάλαιο | Sum insured | The schedule, separately for building and contents |
| The value it is compared against | Ασφαλιστική αξία | Insurable value | General terms, in the article on calculating and paying the indemnity |
| The clause itself | Υπασφάλιση / αναλογικός όρος (αναλογικός κανόνας) | Underinsurance / average clause | In the same article of the general terms |
| The carve-out from the clause | Κάλυψη σε Α΄ ζημιά ή Α΄ κίνδυνο | First-loss cover | In the special terms or endorsements, per cover |
| On a motor policy | Τρέχουσα εμπορική αξία | Current market value | In the definitions of the motor wording |
Names vary by insurer and by edition of the wording. Whether a term exists in your own policy, and in what words, is settled only by your own text.
What does PolicyWallet do with this?
It reads the policy PDF and records the amounts as printed: the sum insured and, where the document also states a rebuild cost, both of them together. When the two are materially apart it surfaces that as something to review, showing the two numbers that produced it, so you can hold them against your own text.
It does not compute a rebuild cost. There is no euros-per-square-metre table behind this, because a number the app cannot source is a valuation rather than an arithmetic. Where the document states only one of the two amounts, PolicyWallet says so instead of filling in the other.
You upload the PDF and both amounts, where the document states them, appear together on one page — alongside the covers and exclusions in plain language, on the same page as the original document, so every figure can be checked against the text it was read from.
Frequently asked questions
Does the average clause apply to a partial loss too?
In the wording quoted here the term is not written as a rule for total losses: the indemnity «is determined (and limited) on the basis of the ratio» of sum insured to insurable value. A ratio applies to whatever it multiplies. How it is worded in your own policy is shown by your own text.
If cover is on a first-loss basis, does the clause apply?
The home wording quoted here states expressly that where a cover carries a first-loss limit, the average clause is not applied to that risk. The wording attaches to a specific cover rather than to the whole policy, so what matters is which cover it sits beside.
Does the property's tax value count?
The wordings quoted here do not mention it. They define the basis for buildings as the cost of rebuilding with the same materials and construction method, less the reduction in construction value. That is a different quantity from any tax valuation.
How is it calculated on a motor policy?
Published motor wordings give the formula explicitly: INDEMNITY = SUM INSURED / CURRENT MARKET VALUE × LOSS, with underinsurance defined as insuring for a value below the current market value. The two numbers you need are in the definitions and on the schedule of your own policy.