Damage insurance rule limiting the amount of the indemnity paid by the insurer in the event of insurance insufficiency (underinsurance). In the case of a partial loss, the indemnity is reduced proportionally to the premiums’ rate paid in relation to the premiums‘ rate that would have been due, if the amount of insurance had been equivalent to the value of the property. (Value that should have been insured). In the case of a total loss, the insurer is released by the payment of the amount of the insurance. There needs to be a clause in the insurance policy deleting or amending it in order to grant more rights to the insured, so that the latter avoids its application.
WARNING! This rule must be distinguished from the co-insurance clause.