Insurance 101 – Chapter 4 – Volume 20 – More on Coinsurance

More on Coinsurance

The policy wording from ISO form CP 00 10 06 95 explains co-insurance as follows:

Coinsurance
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
yourself.

The following video was adapted from my book, “Insurance Claims A Comprehensive Guide” Published by the National Underwriter Company and is available at the Zalma Insurance Claims Library

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The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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