8 ADJUSTINGTODAY.COM underinsured for a loss since the entire amount of insurance for all locations is available to respond to a loss at any one of them. That’s why, other things being equal, blanket coverage will cost more in premium than scheduled coverage. Now, suppose a property owner owns three buildings, each of which would cost $250,000 to rebuild (thus amounting to $750,000 of total building property at risk). If the owner thinks it is unlikely there would be a loss to all three of them at the same time, why couldn’t the owner purchase $250,000 in building coverage, and apply it on a blanket basis so it would apply to a loss at any of the three locations? That’s where coinsurance comes in. Risk professionals understand that the more property you have at risk, the more likely you will suffer a loss. If you have five properties of equal value, you are more likely to sustain a loss to one of them than if you had just one property of that value. Agents and brokers must explain that coinsurance requires insurance for the aggregate value. For their part, claim adjusters must explain how coinsurance provisions limit loss payments to reflect how a limit of insurance relates to the values at risk. Business Interruption Premises It took some time for awareness of property underinsurance to reach its current level. In 2020 virtually every business became abruptly aware of the limitations of business interruption coverage. With their locations closed and operations suspended due to the COVID-19 pandemic, commercial insureds learned they would not collect on their WHAT TO WATCH FOR Are all building features essential to using the insured premises included in the definition of premises?
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