Standard Property policies (unendorsed by carrier) will include a coinsurance clause and it is much different than coinsurance used in health insurance.  In property insurance it is used to encourage the client to insure the property to value and for the insurance company to get adequate premium for the exposure.  The standard coinsurance clause is 80% but can also be 90% or 100%.  Assuming you have an 80% coinsurance clause and replacement cost, this means that you agree to insure the property for 80% of the replacement cost at the time of loss.  The formula used to calculate your payment is the amount carried/replacement cost Xthe amount of the loss - your deductible. Under insuring your property can create a large penalty so it's important to determine the value in advance using a cost estimator guide.

It is possible to use an agreed amount clause or waive coinsurance on some policies if agreed to by the underwriter in advance.

Last updated on February 13, 2010 by Chris Moxley