|
Application of Coinsurance
Your policy may contain an 80% coinsurance clause
that requires you to insure your building or contents at a minimum of 80% of its
replacement value.
Example, at the time of a loss it cost $100,000 to
rebuild your building using the same quality materials and craftsmanship, you
would need to have a minimum limit of insurance of $80,000 to satisfy the
coinsurance requirement.
If at the time of loss your Limit of Insurance is not in
compliance with the Coinsurance Clause the amount of loss paid may be reduced.
Example;
| Replacement Value of
Property |
$500,000 |
| Coinsurance
Clause |
80% |
| Limit of Insurance
required to be carried on policy to satisfy Co-Insurance clause |
$400,000 ($500,000
x 80%) |
|
|
| Limit of Insurance carried on
policy |
$300,000 |
|
Value of Damaged Property |
$ 80,000 |
| Amount Paid on Claim |
$ 60,000 * |
| |
|
|
|
|
|
|
|
|
* limit carried on policy Limit
required to be carried on policy |
x Loss = |
Amount Paid on Claim |
|
|
or |
|
|
|
$300,000
$60,000 |
X $80,000 = |
$400,000 |
Contact us for a
complete review of your policies.
|
