Insurance
Property Co-Insurance Penalty — Underinsurance
Applying the average clause when the insured's sum insured is below the actual property value.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Claims Expense (Gross — Full Loss) | Expense (+) | 50,000.00 | - |
| Co-Insurance Penalty Recovery (Contra) | Expense (-) | - | 20,000.00 |
| Cash — Net Claim Paid to Insured | Asset (-) | - | 30,000.00 |
💡 Accountant's Note
If a building insured for JOD 500,000 is worth JOD 800,000, the insured receives only 500/800 of any claim (the 'average' principle). The insurer effectively only pays 62.5% of the loss. The difference reduces the net claims cost.
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