If the sum insured under non-marine insurance is expressed to be “subject to average” and that sum is less than the value of the subject matter of the insurance then any claim that is agreed under the policy will be reduced proportionately to reflect the under insurance.
Section 81 of the Marine Insurance Act 1906 say that an insured shall be his own insurer as regards any under insurance.
In marine insurance the term average may also refer to one of two types of loss, general average and particular average.
