Coinsurance
A property clause that can reduce payment if you insure below a required percentage of value.
Plain definition
Coinsurance (common on commercial property and some homeowners forms) requires you to carry insurance up to a stated percentage of the property’s value (often 80% or 90%). If you underinsure, the insurer may pay only a proportional share of a covered loss—even if the loss is below your policy limit.
Why it matters
Underinsuring a building to save premium can backfire at claim time through a coinsurance penalty, leaving you with a surprise co-share of the repair bill.
Example
A building should be insured to $500,000 for 80% coinsurance, but you carry $300,000. A $100,000 fire loss might be scaled down because you did not meet the coinsurance requirement.
Common misunderstanding
Coinsurance on property is unrelated to health insurance coinsurance percentages—they share a name only.
Policy language always controls. This is educational content, not advice. See our disclaimer.