The Effect of the 'Co-Insurance' or 'Average' Clause Included in a House

question 16

Multiple Choice

The effect of the 'co-insurance' or 'average' clause included in a house and contents policy is to:

• A) increase payouts to policyholders if they are over-insured at the time of making a claim.
• B) decrease payouts to policyholders if they are under-insured at the time of making a claim.
• C) both a and b .
• D) ensure that a claim rejection arising from late payment can be overturned by the courts.

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Definitions:

Substitute Goods

Products or services that can replace or be used in place of one another, having the ability to satisfy similar consumer needs or desires.

Iced Tea

A chilled beverage made by cooling brewed tea and typically served with ice, sometimes sweetened or flavored.

Complementary Goods

Products or services that are typically consumed together, such that demand for one increases demand for the other.

Coffee

A brewed drink prepared from roasted coffee beans, which are the seeds of berries from the Coffea plant, and is one of the most popular beverages globally.