All commercial insurance policies are subject to a Co-Insurance
clause which requires insurance subject to a certain percentage
of the value of the item insured. If the insurance is placed
to at least the percentage of value required there is no Co-Insurance
penalty, however, if the amount of insurance is less than required
a penalty will apply to all except the smallest of claims.
The operation of Co-Insurance is probably best illustrated
by example:
| Value of Building |
$100,000 |
| Co-Insurance Percentage |
80% |
| Required Minimum Insurance |
$80,000 |
| Amount of Insurance Carried |
$60,000 |
| Damage Caused by Fire |
$25,000 |
| Amount Paid by Insurance |
60,000
80,000 |
x 25,000 = $18,750 |
|
This example puts in dollar terms the Co-Insurance concept
which could be described as
"DID Insure over SHOULD Insure times the LOSS".
INSURANCE TO VALUE DOES NOT COST,
IT PAYS.
If you have any questions about your business insurance, please
feel free to email us;
John, Dick
or Carol.