Disclosure of pro-rata condition of average

(1) Where a contract of insurance contains a pro rata condition of average, the condition is of no effect unless, before the contract is entered into, the insurer informs the insured in writing of the nature and effect of the condition requiring that the insured be his own insurer for the proportion by which the value of the risk exceeds the sum insured. Disclosure of pro rata condition of (2) For the purpose of this section, “value” means– (a) if the policy is on a reinstatement basis, the cost of reinstating the buildings or contents to their condition when new or the cost of replacement at the date of any loss or damage, which ever shall be less; (b) if the policy is on an indemnity basis, the cost of reinstatement calculated as in paragraph (a), less a reasonable for (3) This section shall not apply to an insurance contract entered into or renewed before the commencement date of this Act.