Does Coinsurance Clause Apply to the BPP and Business Income

[Allen Trent]

Well Allen, if you've been paying attention, you know that today the only thing that's important is what you identify as. Not what you are.

I identify as a student loan

 

[MIGA1626]

You didn't insure to actual value at time of the loss, so you as the insured will participate in the loss to the extent that you were carrying too low of coverage to actual at time of loss.

Example: you carry $600k on your policy, but at time of claim you had $1M of actual property. So, you were only insured to 60% . If loss is $100k, You will eat the loss to the extent you were under 80%(60/80). Likely only getting 75k of the $100k loss, minus deductible. Had you been compliant with the 80% or 90% coinsurance clause, the full $100k claim would have been paid, minus deductible. IE: you don't have full coverage if you are only covering a portion of what you actually have

"Did Have" Divided by "Should Have" times Loss minus deductible = Amount you will get. 600k/800k x 100k = $75k minus deductible. IE: $25k coinsurance penalty for trying to elude adequate premiums by staying up to date with valuations/inventory, etc. 80% is the standard as carriers believe a business staying within 20% of what they should carry, but if you are only covering 30% of what you should, you are participating in the loss because you chose not to actually insure for it

That is what i remember from my gender studies college course(s)

LOL on the last part. Ok my thing is that I have NEVER seen this actually applied in the 2 billion claims I have been of party. So does this ACTUALLY ever happen?

 

[adjusterjack]

Come to think of it, in 6000 claims (real number) I've never had to apply coinsurance to commercial or residential property claims.

We can thank agents for keeping their clients adequately insured.

 

[MIGA1626]

Come to think of it, in 6000 claims (real number) I've never had to apply coinsurance to commercial or residential property claims.

We can thank agents for keeping their clients adequately insured.

TEHE! I don't know what my real number is. prob like 1000 or something.

 

[Al3x Lee]

LOL on the last part. Ok my thing is that I have NEVER seen this actually applied in the 2 billion claims I have been of party. So does this ACTUALLY ever happen?

Come to think of it, in 6000 claims (real number) I've never had to apply coinsurance to commercial or residential property claims.

We can thank agents for keeping their clients adequately insured.

Yes, it happens, but after someone has experienced it, they never go underinsured again. I know a restaurant owner who had a big fire and was nailed with a coinsurance penalty.

 

[adjusterjack]

May have wanted a lower premium at the front end and paid for it at the back end. Or, just didn't think about it.

 

[Al3x Lee]

I hope you never leave the forums @adjusterjack , you're a wealth of information

 

[Allen Trent]

I hope you never leave the forums @adjusterjack , you're a wealth of information

I think you found your running mate

 

[Al3x Lee]

I think you found your running mate

Not Liberal enough.

 

[Juannywags]

Come to think of it, in 6000 claims (real number) I've never had to apply coinsurance to commercial or residential property claims.

I have seen it quite a few times in the last 3-5 years give the number of CAT claims I have seen in our area. That being said none of our insureds in my office had this issue. Our office landlord got slapped good because he used the cheapskate agent in town that undervalued his buildings at 60% of RC. They stuck him with about $700k across his entire real estate portfolio that he wouldn't have had to pay had he just been a good boy and not undervalued his buildings to the agent or the agent do his job.