What is That Co-Insurance Clause on My Policy?

British Columbia - What is That Co-Insurance Clause on My Policy?

Good afternoon. Now, I discovered British Columbia - What is That Co-Insurance Clause on My Policy?. Which is very helpful for me and you. What is That Co-Insurance Clause on My Policy?

Co-Insurance is a clause imposed on most industrial property guarnatee policies that requires you to insure your property up to a inescapable limit of guarnatee (usually 80%-90%, sometimes 100%). This means that if you you fail to insure your property to full value, you have become a "Co-Insurer" on your property & in the event of a claim you could be finding at a penalty.

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Now we understand that if we under-insure our property, in the event of a total loss, we are short the difference. Take that same plan & apply it to a smaller loss:

Example: Actual building Value 0,000
Building Insured for 0,000
Co-Insurance Clause 90%
Fire Loss ,000

In this example the guarnatee course states that you must be insured up to 90% of the value of the property (building) (0,000 x 90% = 0,000). You only have the building insured for 0,000 thus leaving you under-insured by 33 1/2%.

You have a fire loss totaling ,000. Because you were under-insured, the guarnatee business will cut the amount paid on the loss by the same ratio that you are under-insured. In this case, the insurer would cut the payment by 33 1/2% and pay you ,000. As the "Co-Insurer" you are responsible for the remaining ,000.

So all the time be aware of the co-insurance clause on your policy. My advice is that you pay to get appraisals done on your property every few years and ask your broker to move you to "Stated amount Co-Insurance". Most insurers will move you to this stated amount co-insurance in return for a copy of the estimate and a signed Statement of Values. This binds the business to agree that there will be no penalty for under-insurance on partial losses as it proves to them that you have done your best to ensure your values are adequate.

The most foremost point is to remember that the onus is on you to ensure that your values are adequate. Even if you have had help from your broker or other surface source in determining the value of your property, in the event of a covered loss, the insurers are de facto only just taking your word for it at the end of the day. It means nothing to them if you under-insure your property, that's why they have this clause to protect them. Who's protecting you?

I hope you will get new knowledge about British Columbia. Where you possibly can put to easy use in your evryday life. And just remember, your reaction is passed about British Columbia.