What results from a claim under a policy with a pro-rata average clause for Paul?

A pro-rata average clause operates by ensuring that an insured person has the appropriate level of coverage relative to the actual value of the property insured. When a claim is made under a policy containing this clause, the insurer assesses whether the sum insured is adequate. If the insured amount is less than the actual value of the property at risk, the insurer will reduce the amount paid in the claim in proportion to this underinsurance.

Thus, in the case of Paul, if a claim is submitted and it is determined that he is underinsured, the application of the pro-rata average clause would mean that the compensation he receives will be less than the full value of the claim. The calculation typically involves a formula where the sum insured is divided by the actual value at risk to determine the payout. This results in a settlement that is appropriately reduced to reflect the level of coverage purchased versus the true value.