Issue #3002

Coinsurance: What Insureds Need to Know

Company XYZ had been growing rapidly. Company officials believed they had comprehensive insurance coverage. But when a substantial loss took place, they were able to recover only a small part of their property and business interruption claims. The problem: understated values, far too low to meet the policy’s coinsurance requirements.

The time to avoid a potential coinsurance penalty is before the loss occurs. That means both the broker and client must communicate up front. There’s no better way to ensure that reported values will be in line with the values at the time of any disaster.