By Gina Ekstam for AssuredPartners
A “coinsurance clause/condition” is found in many commercial insurance policies, but the term “coinsurance” is often a difficult concept to understand. Coinsurance is referenced in property and inland marine coverage, as well as health insurance, but its use is entirely different depending on the context. For this purpose, the focus will be as it relates to property and inland marine coverage.
The coinsurance clause is an “insurance to value clause” for the policy holder. Because of the insurance mechanism of pooling collected premium dollars to pay for future losses in the insurance industry, the purpose of the coinsurance clause is to create fairness in premiums among policy holders.
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