Average Clauses and Underinsurance: How Brokers Can Secure Fair Outcomes

Underinsurance is one of the most common reasons insurers reduce claim payouts. For brokers, it’s a constant challenge. Clients believe they’ve got enough cover, but when the worst happens, loss adjusters argue otherwise. That leaves brokers stuck between frustrated clients and insurers unwilling to budge. 

This is where CEC can help. We support brokers by challenging insurer interpretations, negotiating alternatives, and finding practical solutions that protect both the client relationship and the claim outcome. 

The Case: Accidental Fire Leaves Four Farm Buildings Destroyed 

A serious fire broke out in a hay barn, spreading quickly and destroying four farm buildings. Liability for the fire itself was accepted by the insurer. The problem came later, when the insurer’s appointed loss adjuster alleged underinsurance across the wider property portfolio, applying “average” to reduce the payout. 

The farmer explained that he had insured some of the buildings only for the cost of materials. His plan was to carry out repairs or rebuilding himself if the worst happened. The sum insured reflected that, not a full rebuild value. 

CEC’s Involvement: Challenging the Underinsurance 

The broker contacted us and we quickly reviewed the claim and pressed the insurer to accept the farmer’s alternative method of assessing the sum insured. 

Our argument was straightforward: if insurers provided funds to cover the cost of materials for the damaged buildings, the farmer was ready and able to complete the work himself. This approach still delivered indemnity without unfairly penalising the client for underinsurance that didn’t truly exist. 

We also explored alternative settlement routes with the adjusters to make sure all options were on the table. 

The Result: £53K Offer Increased to £75K 

After negotiations, the original offer of £53,063 for buildings was revised to £75,187. The broker and client were satisfied with the outcome, and because the time spent by CEC fell within the pre-paid service package hours, the client didn’t pay any extra fee for our involvement. 

Why Claim Support is Important for Brokers 

Cases like this highlight why underinsurance disputes are such a risk to broker-client relationships. Without intervention, this farmer would have been left nearly £22,000 short, and it would have been the broker caught in the middle. By bringing in CEC, brokers can protect their client relationships and secure fairer outcomes. 

Working with us means: 

• Specialist negotiation support when insurers apply average or push underinsurance arguments too far 

• Fairer outcomes for clients, helping preserve trust and renewals 

• No unexpected costs where our support falls within existing service packages 

If you’re facing an underinsurance dispute or struggling with average being applied unfairly, CEC can help. Bringing us in early means you don’t just get another set of hands on the claim, you get a partner who knows how to push back, find the right arguments, and secure outcomes that protect both your client and your reputation. 

Don’t let underinsurance erode confidence in the cover you’ve arranged. We’ll help reinforce trust in your advice and build stronger, long-term client relationships.  

Get in touch with CEC today and let us help you deliver the fair results your clients deserve.