Coinsurance Explained -What you need to know
Most Business Insurance policies include a coinsurance clause for building and business personal property coverage. Coinsurance creates an agreement between the policy owner and insurance company on the value of the insured property and the amount of insurance purchased.
The benefit is that coinsurance allows for lower insurance policy costs. But what you need to know is that IF the insurance purchased is less than the agreed percentage, the insured will be required to pay a portion of any losses.
Here is a simplified example: If a business is valued at $100,000 and there is an 80% coinsurance clause, the insured is required to purchase at least $80,000 of insurance. If instead, the insured purchased $40,000, (half of what should have been purchased), the company will only pay half on losses.
Awareness of the percentage of your coinsurance clause, along with knowing the value of your building and property will provide the information needed to make the best decision to fit your needs.
Let the experienced professionals at Cobb-Hall eliminate confusion and provide solutions designed specifically for your needs.