Claims & Loss Prevention - June 11, 2026 - 14 min read
Underinsurance and the Average Clause in India 2026: Why Sound Sums Insured, Not Cheap Premiums, Decide What a Fire Claim Pays
The most common reason a large Indian fire claim pays far less than the loss is not a coverage dispute. It is the average clause biting on an underinsured sum insured. This piece explains how proportionate settlement works inside the claim, and the order in which the surveyor applies average, the deductible and the sub-limits. It also covers why declared values drift below the surveyor's day-of-loss reinstatement assessment, how the reinstatement-settlement and waiver-of-average provisions change what is actually paid, and the declared-value pitfalls that only surface at the fire.
By Sarvada Editorial Team
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