Coinsurance Clause

Summary of Coinsurance Clause

A provision in some contracts of insurance under which the insurer will restrict recovery under the policy unless the insured party maintains coverage equal to a given percentage of the value of the property covered. For example, a policy might provide that the insurer will pay the full actual value of a loss when the property involved is insured for at least 80 percent of its value. If the insured has the property covered for only 60 percent of its current value, the insurer will pay only 60 percent of the value of the loss; the insured becomes a coinsurer responsible for the difference.

(Main Author: William J. Miller)