What is Coinsurance?

Coinsurance is a provision in the property form which requires that property be insured to some specified percentage

of its full value (80%, 90% or 100%) If at the time of loss it is determined that the insured carried inadequate limit, the

loss recovery will be a percentage of the total loss, calculated by dividing the insured amount by the amount of

insurance required.

Example: A building valued at $100,000 has a 90% coinsurance clause and is insured for $45,000. It suffers a

$20,000 loss. The insured would recover $45,000/(.90 x 100,000) x 20,000 = $10,000 (less any deductible)

For Business Income, what does 1/3, 1/4 and 1/6 Monthly Limit of Indemnity mean?

Provision on Business Income form which provides for recovery based on a 30-day period to a preselected percentage

of the business income limits.

Example: The monthly limitation selected is 1/3 with a limit of $120,000. Loss would be paid up to max of $40,000

per month (1/3 of $120,000) during period of indemnity. Coverage would cease when limits are exhausted or period of

indemnity ends.