The Average Clause:

If you have under insured yourself this will result in Average being applied to your policy.  The Average Clause reasons that if you have under insured yourself, you have taken a portion of the risk on for yourself and have "self-insured" it.  Thus at claims stage you will only be paid out a rateable portion of the claim.

For example:  Should you insure your building for R500 000 but it should actually be insured for a R1 000 000, and your claim is for R200 000.  Then you will be paid out R100 000 as you are 50% under insured.

Other useful questions:

How should I insure my building in South Africa?

Where can I obtain competitive insurance in South Africa?

How do I ensure that I do not fall get the average clause applied to my insurance?