average clause

noun [C] INSURANCE

Definition

› a part of an insurance policy that states that if the insurance value of a property at the time of loss or damage is less than its real value, payment by the insurance company will be reduced according to the difference. For example, if a piece of jewellery worth £10,000 has an insurance value of £5,000, 50% of its real value, the insurance company will pay £2,500, which is 50% of the insurance value

(Definition of average clause noun from the Cambridge Business English Dictionary © Cambridge University Press)