The co-insurance clause is a common and often misunderstood part of property insurance policies. In effect, the insurance company agrees to reduce the premium on a policy if you (the property owner) will carry insurance equal to a specific percentage of the property's true value (usually 80% to 90%).
What is 80% coinsurance clause?
- An eighty- percent co-pay (or coinsurance) clause in health insurance means the insurance company pays 80% of the bill. A $1,000 doctor's bill would be paid at 80%, or $800. The above definition also applies to coinsurance in liability insurance.
What is coinsurance clause?
- Coinsurance, also known as a “coinsurance clause” in an insurance policy, is a requirement (policy condition) that states an insured must carry insurance equal to at least a certain percentage of a property’s actual cash value (ACV).
What is better 80% or 90% coinsurance?
- One may also ask, is 80 or 90 coinsurance better? Insure at 100% total insurable value and use 90% coinsurance. Yes, there is a discount on the rate, but it's betterto insure for 100% of the value and use an 80% coinsurancepercentage—then you have a 20% cushion.
How to calculate co-insurance for property claims?
- Determine the Value. The insurer determines the value of the property at the time of the loss. ...
- Calculating a Damage Claim. If a fire causes$100,000 in damages,the insurer calculates the claim by taking the percent and multiplying it by the amount of the loss.
- Subtract the Deductible. ...
- Avoid the Coinsurance Penalty. ...