Question

- Explain how the coinsurance provision or clause in property insurance works. (write in a single paragraph)

Answer 1

Coinsurance provision in property insurance signifies that insured will be penalized by the insurer where the insured purchased the insurance against property lower then specified perecntage defined in the policy. In such case a ratio will be determined by dividing value of insurance taken by value of insurance required. Claim amount will be multiplied with ratio and specified percentage in policy for coinsurance. Arrived final amount is paid to the insured and rest is deducted by the insured as penalty.