What Is Coinsurance for Commercial Property or Homeowners Insurance?
In regards to Commercial Property or Homeowners Insurance, coinsurance is a bit of a misnomer. In health insurance, it means you are literally coinsuring part of each claim up to a certain dollar amount. In property insurance, it’s a bit different. In the video below, I will attempt to explain it in layman’s terms.
Irmi, an online authority for all things insurance, has an exhaustive article explaining Property Coinsurance to those who want to really gain a full understanding. Most people probably just want the high view so they can avoid its traps! That is the scope of this article and the video below.
In a nutshell, here is what you should know about it:
- It’s the amount for which you are obligated by the insurance carrier to insure your commercial property or home without incurring a penalty
- Failure to comply with coinsurance will result in penalized claim payouts equal to the amount by which you are “underinsured” (according to the coinsurance clause)
- Insurance carriers, through their independent insurance agents, often provide “cost estimators” whereby they will suggest (or even mandate) what they believe is the correct valuation
- Ideally, you want to have coinsurance waived from your insurance policies entirely, if possible