Coinsurance is an often misunderstood term and one that causes frequent dissatisfaction with insureds over claim settlements. Most losses are partial losses. It is rare that the entire building or amount of covered property is destroyed. Knowing this, individuals deciding to insure their business property might insure for only part of its value. The insured may reason that since it is more likely to have a partial loss than a total loss, why spend premiums on complete insurance?
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