More on Coinsurance
The policy wording from ISO form CP 00 10 06 95 explains co-insurance as follows:
If a coinsurance percentage is shown, in the Declarations, the following condition applies.
a. We will not pay the full amount of any loss if the value of Covered Property at the time of loss times the Coinsurance percentage shown for it in the Declarations is greater than the limit of insurance for the property.
Instead, we will determine the most we will pay using the following steps:
(1) Multiply the value of Covered Property at the time
of loss by the Coinsurance percentage;
(2) Divide the Limit of Insurance of the property by
the figure determined in step (1);
(3) Multiply the total amount of loss, before the application
of any deductible, by the figure determined
in step (2); and
(4) Subtract the deductible from the figure determined
in step (3).
We will pay the amount determined in step (4) or the limit
of insurance, whichever is less. For the remainder, you will
either have to rely on other insurance or absorb the loss
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